The big Xbox Series S interview: why Microsoft made an entry-level next-gen console

We knew it was in development, we even got to see it during our visit to the Microsoft campus back in March – but today, Xbox Series S launches and it’s a fascinating product. Targeting an aggressive $299 (£249 in the UK) price-point, the junior next-generation Xbox allows users access to a much cheaper console that still plays the same games as the premium/performance Series X that’s $200/£200 more expensive. The story behind the machine is remarkable and illuminates the challenges the platform holders will have in reducing costs over time, as well as suggesting a difficult time ahead in delivering a generational leap in console performance beyond Series X and PS5. I spoke to Xbox system architect Andrew Goossen about Series S in person back in March and in a follow-up call several months later after the system was revealed.

The bulk of this Xbox Series S discussion actually began after wrapping up an interview mostly centred on Series X. We’d seen Series S in the flesh the day before, but it wasn’t clear how much Microsoft wanted to talk about its entry-level machine – we hadn’t even got to see it in action. “If you don’t mind, there’s another thing that I did want to mention as well,” began Andrew Goossen, and that’s the beginning of what turned out to be a truly remarkable discussion, giving a hitherto untold story about the challenges in delivering new console hardware.

“Series S has been very impactful for us. As we design our new consoles for the new generation, we’re very much looking forward through the generation to be thinking ahead – like, how does this work? – and that’s why we got to two consoles at the same time,” Goossen continued. “We are facing a big change in how consoles are designed. I believe when we first started building the original Xbox 360 – the smallest one without the HDD – that cost us about $460. By the end of the generation it cost us around $120 – and that cost reduction path was driven principally by silicon cost reduction.”

To put that into perspective, Xbox 360 launched with individual CPU and GPUs, both fabricated at 90nm. By the generation’s end, those two components had been combined into a single chip, delivering a significant cost reduction in its own right, and they were also delivered using a much smaller process (possibly as low as 32nm on the final model). Between launch and the end of the 360’s lifecycle, the machine had actually transitioned through several fabrication nodes. Its successor – Xbox One – saw its processor revised just once, down from 28nm to 16nm FinFET. Cost reduction opportunities were thin on the ground for this generation and will be even more constricted going forward.

“Moore’s Law is certainly not dead! Moore’s Law is continuing and we have a good path to 5nm and 3nm, and those are going to bring improved performance and good power,” enthuses Goossen. “What they’re not bringing any more is a good cost reduction cost per transistor – and so this has foundational impacts to console development, because now we’ll get cost reductions, but they’re slowing down and it won’t be nearly the magnitudes that we’ve seen before.”

The fact is that future nodes like 5nm and 3nm do deliver advantages then – and PC processors and GPUs along with smartphones can still benefit from those. But typically, consoles stick to the same performance profile across the generation. Goossen is essentially suggesting that leveraging these nodes for cheaper consoles may not be an option, which poses a difficult problem for the Xbox team going into the future with the intention of delivering even more powerful hardware. Processor performance is tied closely to transistor count – but if the cost per transistor is not reducing, a new chip with more logic will cost a lot more to make, even if it’s actually smaller than today’s processors. For the new consoles, a smaller, slimmer machine is a possibility – but the actual cost of making it won’t change that much.

“And so that was another one of the reasons why we felt that we really had to do Series S at the beginning because we had to design for the future. For the first time, we had to have the entry-level console at the beginning. Previous generations were kind of easy because at the beginning of the generation, you make something really expensive – put as much silicon and as much performance as you could into it – then you would just ride the cost reduction curves down to mass market prices. That’s not there anymore,” Goossen explains.

In Microsoft’s recent HotChips presentation on the Xbox Series X, Microsoft’s engineers also outlined how challenging it is to deliver a generational leap is in a world where silicon costs are problematic and where year-on-year drops in memory cost are tailing off. The presentation suggested that the 7nm process was not as cost-effective as the 16nm used for Xbox One X and S, but Andrew Goossen puts this into perspective:

“Well, it’s still declined to 7nm – but you’re right that the wins had been less and so it’s definitely an ongoing industry trend with the cost per transistor relative to previous processes. The wins haven’t been as big… going up to 7nm, but there have still been wins, 7nm is still cheaper per transistor than the previous ones. It’s just after 7nm is where it potentially starts going up… you get those other benefits like the increased clock rates and you get the benefits of better power, but those aren’t things that we can directly apply to cost reductions.”

It’s not all negative, though. The cost of NAND flash modules used for solid-state storage is still decreasing at a healthy rate – 23 per cent year-on-year according to the HotChips presentation – but the extent to which that will result in a cheaper console remains to be seen.

“Even with the flash, you know, that’s a tough one because consumer expectation will be that they’re getting more storage. So it’s not really a cost reduction, right? Traditionally, we’ve always modelled a fixed cost for the HDD and you just increase capacity for that fixed cost,” explains Goossen.

The end result will be that for a while at least, supporting both current-gen and next-gen Xbox hardware means that developers will be faced with the task of supporting four different SKUs. Xbox One X has already been discontinued, when an alternative course of action may have been to keep that as the entry level console as opposed to introducing Series S.

“I’ve read a lot of question on the internet, like, why isn’t Microsoft going to continue Xbox One X as the low-end machine. Well, one thing is that it would last a long time through the generation and we felt that the new generation is defined by aspects such as the Xbox Velocity Architecture, and graphics features such as variable rate shading and ray tracing and the 4x processing performance boost on the CPU,” counters Goossen. “And so we wanted to make sure that there was an entry level at the right price-point so that we could really advance the generation rather than hold it back. I’ve heard that Series S is going to hold back the next generation but I actually see Series S advancing it because by doing Series S we’ll have more games written to the characteristics of the next generation.”

There’s also the matter of economics too. Our understanding is that a shrink of the Xbox One X’s Scorpio Engine processor wouldn’t be easy, while the wide memory interface isn’t easily rationalised for an entry-level product. Its 12GB of GDDR5 (with 12 DRAM modules on the mainboard) would also be very hard to reduce down.

“The other ironic thing is that we did look at Xbox One X and we couldn’t get it down to the price-point we wanted to get, so I look at Xbox Series S and it’s cheaper than Xbox One X, it would have all of these next-gen features and then in terms of graphics performance, well you guys know this, but the per-cycle improvements with the new RDNA 2 architecture are like a 25 per cent improvement. If we just do the back of the envelope math right now, 4TF brings you up to 5TF just according to that factor.

“And some of the data we’re seeing with our content is suggesting that it’s even better, and then when you think about other features of the new architecture that we’ve added like variable rate shading and FP16, you know, I think that could get us the additional 20 per cent to pretty much equal the performance for new games… and it’s cheaper and you get all the other features that define the new generation. And so for me, it was an easy decision – let’s go do this.”

Of course, since the interviews took place, we’ve actually experienced the Series consoles and a lot of the arguments about retaining Xbox One X as an entry-level machine rapidly evaporate simply due to quality of life improvements. Having the combination of the Zen 2 processors and the SSD makes even simple tasks like navigating the front-end a vastly improved experience – loading times are a night and day improvement and when a launch title like Watch Dogs Legions runs with hardware accelerated ray tracing, that’s a feature Xbox One X couldn’t deliver. Series S also includes one of the X’s most impressive new features, Quick Resume, something else that wouldn’t be possible on One X: “The other interesting little observation is that the Series S Quick Resume will be faster [than Series X], because there’s less VM there for us to write and read back,” adds Goossen. “The SSD [performance] is exactly the same between Series S and Series X.”