Gaming site Kotaku reported on Wednesday that Microsoft Corporation (NASDAQ:MSFT) will release two new Xbox models. A smaller, slimmer and cheaper version of Xbox One will be released later this year while a more powerful model will be launched next year.
According to Kotaku’s sources, the slimmer version will include a larger 2TB hard drive and is likely to be unveiled at Microsoft’s E3 2016 press conference.
Codenamed Scorpio, the 2017 console is expected to comprise a more powerful GPU to support 4K gaming. It will also support Facebook, Inc.’s (NASDAQ:FB) Oculus Rift VR headset. Microsoft’s ongoing partnership with Oculus enables Rift headsets to connect to Windows 10 PCs and stream Xbox One games.
One of the sources stated that these software revisions are a part of a wider Microsoft strategy codenamed Project Helix.
Notably, Kotaku’s sources expressed concerns about Scorpio’s data transfer speeds. Although the system will support 4K resolution through GPU upgrade, there is currently no plan to upgrade I/O transfer speed. This may result in longer loading times for 4K games.
At an event in March, Xbox boss Phil Spencer hinted at these hardware revisions. He stated “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,” he said. A few days later, he elaborated. “What I’m saying is as hardware innovations happen we want to be able to embrace those in the console space, and make those available and maybe not have to wait seven or eight years for things to happen.”
Microsoft doesn’t seem to be the only company upgrading its hardware. Earlier, there were reports that Sony Corporation (NYSE:SNE) was developing a new PlayStation 4 model capable of handling 4K games and with improved compatibility with the company’s PlayStation VR headset.
We note that Advanced Micro Devices, Inc. (NASDAQ:AMD) supplies APU for both Xbox One and PS4. So if the news is true, the company is going to see an upside in APU sales. More powerful APUs will be required for 4K-capable consoles.
Currently, Microsoft is a Zacks Rank #3 (Hold) stock.
A better-ranked stock in the broader technology space is CommVault Systems, Inc. (NASDAQ:CVLT) , sporting a Zacks Rank #1 (Strong Buy).
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