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Microsoft could release two new Xbox models in next two years

It's reportedly prepping a cheaper, slimmer model for release this year, and a more powerful model for 2017, signaling a new strategy of more frequent updates.

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The era of waiting many years between new video game consoles could be over.

Microsoft is set to release a slimmer, cheaper Xbox One later this year, and a more powerful Xbox One -- capable of handling virtual reality system Oculus Rift -- in 2017, according to video game news site Kotaku. The company could announce the smaller version at next month's E3 video game conference.

The different boxes suggest Microsoft could switch to a strategy where it releases a new version of its Xbox console more frequently, rather than wait multiple years between new hardware. The idea is for these devices to be backward- and forward-compatible with the different Xbox models and Windows 10 devices.

Microsoft declined to comment on the report.