Microsoft has announced two new versions of its Xbox One console in an ambitious plan to ensure the lifespan of its latest machine.

A new, more compact version called Xbox One S is launching in August, while Christmas 2017 will see the arrival of Xbox One Project Scorpio, a significantly more powerful update, that will support high definition virtual reality as well as games designed to exploit new 4K Ultra HD technology.

During the company’s press conference ahead of the E3 games event in Los Angeles – the industry’s largest event, which begins tomorrow – Xbox chief Phil Spencer declared that the new consoles are designed to ensure the lifespan of the machine beyond a single hardware generation.

He also announced closer compatibility between Xbox One and Windows titles, allowing cross-platform multiplayer gaming in titles like Gears of War 4 and Minecraft.

“Now we see a whole new gaming landscape being driven by the unprecedented pace of innovation,” said Spencer. “While the console ecosystem is stronger than ever, most of us play games on more that one device – we want to deliver the choice to play the games you want on what you want, with who you want.”

The new all-white Xbox One S is 40% smaller, and features an integrated power supply and up to 2TB of hard drive space; it comes with a new, redesigned version of the Xbox One controller, complete with textured handles for improved grip and increased wireless range. The price will start at $299. A UK price was not available at time of press.

It will be the first major change to the console since its original launch in 2013, and was a widely expected move. Sony is also working on an updated PlayStation 4 console, rumored to be named PlayStation 4 Neo, which will also offer 4K Ultra HD compatibility.

The Xbox One S offers compatibility with 4K displays and will support 4K television content, and high dynamic range (HDR) visuals. However, the Project Scorpio machine will support a new era of fully 4K games. The machine uses a core of eight central processing units, and a six teraflop graphics processor. Spencer promised “true 4K visuals without sacrifice” and referred to the machine as “the most powerful games console ever made”.

Cross-platform play was another key theme of the conference. A new Xbox Play Anywhere campaign will mean that consumers will be able to buy one copy of a game which will give them access to both Xbox One and PC versions. The first title to support the feature will be Gears of War 4 which will offer cooperatively multiplayer play across PC and Xbox One. Minecraft is also set to support Xbox Play Anywhere, allowing players to construct and share worlds with other players whether they are on console, PC, iPhone or Android.

Spencer also assured players that all game releases would be compatible across the entire range of Xbox One consoles. It looks like each disc will include content or builds that will be accessible to those with the more powerful Scorpio iteration.

Unless Sony unexpectedly reveals its own hardware plans at E3, Microsoft now has a head start on its rival in the next stage of this generation, after having struggled to maintain competition with PlayStation 4. While Sony’s machine has shifted about 40m units since its launch in 2013, Microsoft has not released figures on Xbox One, but it is thought to be at 20m units sold.

“As Sony did last generation with the PS3 Slim less than three years into the sales cycle, Microsoft has moved quickly to release an upgraded version of the Xbox One,” said analyst Piers Harding-Rolls of IHS Digital.

“The reversal in fortune of this generation compared to last means that Microsoft has to be aggressive with its console upgrade strategy to gain market initiative. IHS forecasts the installed base for Xbox One at the end of 2016 will reach 28.7m consoles, while PS4 will reach 53.3m consoles.”

Alongside these hardware announcements, Microsoft showed several new titles, including an array of sequels such as Dead Rising 4, State of Decay 2, Halo Wars 2 and the popular open-world racer Forza Horizon 3. However, it was the revelation that the Xbox One is now a product family rather than a single machine that will have gamers and industry insiders debating the future of the console industry.