It seems the console makers listened to all the feedback about the current-gen of consoles being severely underpowered versus PCs. Sony is said to be working on a "PS4.5" capable of supporting VR gaming and Microsoft is reportedly working on two new Xbox consoles.
Polygon confirms the news and heard one of the new Xbox consoles will be over four times more powerful than the current Xbox One! The other version will be a slimmed-down model of the current hardware, with a redesigned controller and 4K video support. It should be about 40 percent smaller than the current model and an announcement is expected next month.
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.
Whereas the current Xbox One is believed to have peak computing power of 1.32 teraflops, versus 1.84 teraflops for the PS4, the new consoles promise to be much more powerful. The PS4.5 (aka Neo) has a rumored peak performance of 4.14 teraflops and Microsoft's Xbox "Scorpio" is reportedly gunning for 6 teraflops. Both Neo and Scorpio are slated for 2017:
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.