Microsoft's Xbox chief Phil Spencer has denied reports that they are developing a new console capable of playing video games only via streaming.

Rumors recently surfaced that Xbox's upcoming Project Scarlett release would involve two next-generation consoles, one of which would be a high-end device while the other would be a streaming-exclusive version.

The new "cloud console" was said to be capable of certain functions such as image processing, collision detection, and controller input.

However, Spencer was quick to shoot down rumblings of a possible new cloud-based video game console.

"We are not working on a streaming-only console right now," Spencer told gaming website Gamespot.

"We are looking at the phone in your pocket as the destination for you to stream, and the console that we have allows you to play the games locally."

The Project Scarlett console will be able to present 8K graphics and support ray tracing and SSD storage. It will have a custom CPU based on the Zen 2 and Radeon RDNA architecture. Microsoft said this new processor will have four times the power of the one seen on the Xbox One X.

The new Microsoft console is designed to improve framerates in video games with the help of a GDDR6 RAM.

Project Scarlett will be rolled out between October and December 2020 and will have Halo Infinite as one of the game titles headlining its release.

Xbox's Approach To Cloud-Based Gaming

Aside from Project Scarlett, Microsoft also announced the launch of Project xCloud this coming October. The new online subscription service is set to give gamers access to Xbox-quality video games via their mobile devices.

Talking to Gamespot, Spencer explained that cloud technology is one of the directions that the video game industry is headed. While he agrees that gaming will inevitably move to the cloud, he believes that physical compute devices, such as smartphones, the Surface hub, or the Xbox, still play a key role in the current scene.

For Microsoft's part, Spencer made it clear that they aren't planning on coming out with a cloud-exclusive console. He said some people may have thought they were working on such a product when he teased the upcoming release of the xCloud and a next-gen console last year.

The Xbox chief clarified that they are more focused on making use of devices that are already available to gamers. If a gamer already has a PC and loves playing video games there, Spencer said he would respect that and provide that gamer with the content and services that they would want for their PC.

Challenges Of Playing Video Games Via Cloud

One of the biggest challenges for cloud-based gaming right now is the prevalence of lag. The issue lies in the inability of current gaming controllers to input commands fast enough to match the action on screen. This was reportedly seen on some of the game demos presented for Google's Stradia service.

Spencer said their goal with xCloud is to provide gamers with an Xbox experience even when using a smartphone. They are not promising customers with an "8k 120 hertz" performance, but they do offer the convenience and choice of playing Xbox games on mobile.