Microsoft confirmed the current Xbox will likely be the last console generation as future iterations will adopt a more smartphone-like launch cadence. Apple launches a new iPhone every year and that is how Microsoft sees the future of the Xbox, as a steady stream of hardware innovation instead of the traditional seven-year gaps between consoles.
Here's what Aaron Greenberg, Microsoft's head of Xbox games marketing, had to say about it in an interview with Engadget:
Q: The Xbox platform has moved forward to have such regular updates and new features coming all the time. It kind of seems like hardware is going the same way. There was a very short gap between the Xbox One and the Xbox One S, and we're probably talking an even shorter gap before Project Scorpio. Do you see a future of console upgrades continually happening? Is this the last console generation?
Greenberg: I think it is. ... For us, we think the future is without console generations; we think that the ability to build a library, a community, to be able to iterate with the hardware -- we're making a pretty big bet on that with Project Scorpio. We're basically saying, "This isn't a new generation; everything you have continues forward and it works." We think of this as a family of devices.
The future of Xbox gaming will look a lot like PC gaming and Project Scorpio will be the first step of this.
Microsoft says there will not be console-exclusive games for Project Scorpio, in terms of compatibility, everything that works on Xbox One will work on Project Scorpio, but the other way around this will not entirely be valid because VR experiences will be one of the new features of the Project Scorpio console. Greenberg claims they don't think of HD VR gaming as console gaming, so you won't get that on the Xbox One.
The idea of switching consoles to a much more frequent update cycle isn't limited to Microsoft, there are rumors floating around that Sony is considering the same thing for its future PlayStation consoles.