[Update: Microsoft has confirmed "Project Scorpio." The console will deliver 6 teraflops of computing capability, and true 4K resolution. Microsoft is saying it's the most powerful GPU put into a console to date, and it's coming in holiday 2017.]

Microsoft has two new Xbox consoles on the horizon, according to reports on Kotaku that Polygon has corroborated with its own sources. Those sources also told Polygon that one of those new consoles will be over four times more powerful than the current Xbox One and that the announcement at E3 was triggered by, among other things, a faster-than-expected timeline for Sony’s own upgraded PlayStation 4. The other console, a slimmed-down version of the current hardware, will also be getting a redesigned controller.

The latter is scheduled to be revealed at E3 or at an event shortly before, as plans are currently in discussion. Tom Warren at Polygon sister site The Verge reports that the console will be "40 percent smaller than the current model and will likely include 4K support," which will be for video content specifically, though the existing Xbox One models include scaling hardware to output games at various resolutions. Our sources also confirm that this will be the smallest Xbox ever made.

Current plans have the smaller Xbox One scheduled for release this August. Pricing for the system has not been finalized.

The other console, codenamed Scorpio, is unlikely to be released until late 2017, according to Polygon's sources. It will likely be announced in the next month, though plans are somewhat in flux. Like the all-but-confirmed PS4 "Neo," Scorpio represents an evolution of console generations, one that straddles the line somewhat between an entirely new installment of the Xbox platform and a continuation of the existing Xbox One.

Power is a primary concern for Microsoft with Scorpio. The PS4 has remained a constant leader over the Xbox One in this respect, with games on the platform usually running at higher resolution and a higher framerate on the PS4 than their Xbox One counterparts. Microsoft is determined to end this narrative.

The Xbox One is believed to operate a peak target of 1.32 teraflops, compared to the 1.84 teraflop performance numbers attributed to the PS4. Meanwhile, per documents secured by Giant Bomb's Austin Walker — and corroborated by our sources — the PlayStation 4 "Neo," at approximately 2.25 times more powerful than the PS4, is likely to have a peak performance number of 4.14 teraflops.

The current performance target for Microsoft's Scorpio is approximately 6 teraflops.

Previous reports and documentation for Sony's new console have suggested that PS4 games will work on both its current iteration of the system and the Neo, and our sources indicate this is also the case with Scorpio. Kotaku also reports that Scorpio will be "technically capable of supporting the Oculus Rift." Polygon's sources verified that while Scorpio will be technically capable of supporting the Oculus Rift, Microsoft's relationship with the virtual reality headset maker hasn't changed since it was announced last summer.

Microsoft originally had no plans to announce Scorpio in 2016, preferring to wait until next year, possibly at its own event prior to E3 2017. This would be in keeping with the company's existing precedent for new hardware launches. This was timed to combat expected plans by Sony to announce and launch the Neo in 2017. However, after GDC, evidence industry-wide has indicated that Sony's timetable for the Neo either has accelerated or was always intended for this fall. Because of this and other factors, Microsoft is feeling pressure to announce both its new, smaller Xbox One console and the upgraded Scorpio — colloquially referred to internally as Xbox One-Two — at this year's E3, or a last-minute event just prior to the LA convention.

There are those internally at Microsoft who are sensitive to consumer unrest at the prospect of more powerful hardware so quickly compared to the previous console generation. The Xbox 360 was released in November 2005, the Xbox One in November 2013. Discussions are underway about how best to manage that. A price for Scorpio is also still under active discussion, and is unlikely to be revealed until next year.

More clear, however, is that "universal compatibility" is a core principle for the system. Scorpio is currently being designed to support all Xbox One software.

Much of this information has been rumored for weeks. Well-known Microsoft insider Paul Thurrott's site, Thurrott.com, originally discussed new Xbox hardware in a post written by Brad Sams in April, which also reported that a new controller was in development. [Ed. note: This article originally miscredited reporting on Xbox rumors on thurrott.com to Paul Thurrott. We regret the error.]

Thurrott also reported on additional expected convergence between Windows 10's gaming platform and the Xbox One, which Kotaku further corroborated. The outlet learned of a specific initiative, codenamed Project Helix, to launch day and date versions of Xbox One software on Windows 10 as well, though this is already being borne out with the PC launch of Quantum Break in March and the simultaneous launch of Halo Wars 2 on Windows 10 and Xbox One later this year.

Xbox head Phil Spencer, during a keynote at an event in February of this year, suggested the possibility of new Xbox hardware that followed a different path from previous generational transitions. "We can effectively feel a little bit more like we see on PC, where I can still go back and run my old Doom and Quake games that I used to play years ago but I can still see the best 4K games come out and my library is always with me," Spencer said. "Hardware innovation continues while the software innovation is able to take advantage and I don't have to jump a generation and lose everything that I played on before."

In a follow-up interview after Spencer's keynote, the Xbox head elaborated on the company's philosophy for a new approach to hardware with Polygon's Nick Robinson. "We look at these other ecosystems out there like mobile, tablet and PC and we see that they have a very continuous evolution cycle in hardware, whereas between console generations most of the evolution is making it cheaper and potentially making it smaller," Spencer said. "Both are meaningful but don't make the games play any better. If you look at PC specifically and see the evolution that happens there, there's no reason why console can't ride that same curve.

"I look at the ecosystem that a console sits in and I think that it should have the capability of more iteration on hardware capability. Sony is doing this with VR and adding VR capabilities mid-cycle to the PlayStation 4 and they are doing that by adding another box. I don't mean that as a negative. But it's not changing what the core console is about.

"For consoles in general it's more important now than it's ever been, because you have so many of these other platforms that are around. It used to be that when you bought your console you were way ahead of the price performance curve by so much, relative to a PC. But now PCs are inexpensive and your phones are getting more and more capable.

"I still think a console is the best price to performance deal that is out there but when you look at the evolution ... I'm not going to announce our road map for hardware ... but what I wanted to say on stage for people when they see this vision of ours and question our commitment to console I want to make sure that people see that what we are doing enables us to be more committed to what consoles are about than we've ever been and innovate more consistently than we ever have. That's the key for me."

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