Microsoft has two new versions of their Xbox One console in the pipeline, according to a report filed Wednesday by Kotaku.

The first version, which is rumored to appear sometime in 2016, will be a smaller, more affordable version of the current gargantuan gaming machine. Kotaku’s report also suggests that this new model will contain a luxurious 2TB hard drive for those ample-sized space requirements of modern games.

Will it be time to say goodbye to the huge Xbox One? We will find out for sure at E3 2016

The report did not make any references as to what the price of this new model will be. Current Xbox One’s are retailing for $349 with a number of bundled game options included.

The second Xbox One model that is rumored to be in development is code-named “Scorpio” and will be an iterative upgrade to the current generation Xbox One, much like the rumored upgrade to the PlayStation 4; PlayStation 4K. (Or Neo, as it is code-named)

This new version will feature a more powerful GPU, and will be designed for eventual integration with Virtual Reality. The report from Kotuku, as well as reports circulating from the Italian branch of Eurogamer, suggests that Microsoft is looking to secure a partnership with high-profile VR developer, Oculus, in order to secure compatibility with the much-publicized Oculus Rift. This new unit would make its market debut sometime in 2017.

The report goes on to speculate on Microsoft’s intentions to further integrate PC and Xbox gaming, with the end-goal of transforming the idea of Xbox itself: from an actual console, to a branded service that can be played across multiple devices.

If these rumors turn out to be true, then we are in store for an epic hardware showdown in 2017, as Microsoft, Sony, and Nintendo vie for attention and money.

Microsoft has not confirmed or denied the validity of these rumors; however Xbox boss Phil Spencer took to Twitter and made an interesting observation:

Lots of creative chatter today. Excited to share our gaming story at E3 on June 13th https://t.co/QjGUkH1Ofx….

— Phil Spencer (@XboxP3) May 25, 2016

In any event, the idea of the 5-year console cycle is in the process of being re-thought; and the industry considers adopting the up-gradable flexibility currently enjoyed by PC gamers. Remember; it was Sony’s on Shu Yoshida who once mused on the possibility of there not being an eventual PlayStation 5.

We are only a few short weeks away from E3 2016, where Microsoft will elaborate on their Xbox One plans in full detail. NerdBacon will of course, be bringing you expansive coverage of the event, so stay tuned!

What are your thoughts on the possibility of upgraded Xbox One hardware? What about the idea of up-gradeable hardware in general? Let us know in the comments section below.