According to multiple sources.  Microsoft will release an all-digital and cheaper version of Project Scarlett after all.
 
Jason Schreier of Kotaku reports, that according to his sources. A cheaper version of Project Scarlett, codenamed “Lockhart” is in the works. Alongside Microsoft’s next-generation system, codenamed “Anaconda”.  
 
The existence of “Lockhart” was speculated before Microsoft unveiled Project Scarlett at E3 2019.  Yet after a subsequent report and statements from Xbox head Phil Spencer, many speculated that development on “Lockhart” had ceased.  And that Microsoft would only release one console in 2020.
 
Another report from The Verge’s Tom Warren corroborates Kotaku’s reporting.  According to Warren, “Lockhart” not only exists but will release alongside Microsoft’s mainline console. Due out in Holiday 2020.
 
According to Schreier, the basic functions of “Lockhart” would focus on 1440p and 60fps gaming. Compared to the 4k resolution target for “Anaconda”.  He also speculates that it is very likely Microsoft will promote a package deal involving xCloud and Games Pass with “Lockhart”
 
If these reports are indeed true, Microsoft will release both consoles in Holiday 2020.  It will compete with Sony’s upcoming Playstation 5, and will officially kick off the next-generation of consoles.