This sounds ... kind of iffy, to be honest. Like they want to push hardware out quicker without making expensive generational changes, thus getting core gamers to buy every 4 years instead of every 8. This would save them so much money in terms of ad campaigns and marketing research. This is obviously an "iPhone" type model they're aiming at.
The actual difference to games, if they still have to fit within the specifications of the original, would be minimal, probably tied to visual improvements. A big deal for some, certainly, but not for everyone.
The other major impact would be that significant price drops would be a thing of the past. The price would have to stay firm throughout the generation, though that would also limit how substantial an improvement they could apply. If Xbox Next 1.0 debuts at $400 then Xbox Next 2.0 should not cost more than $400, which would probably render the difference between the two machines relatively small.
I'm not saying it's a bad concept, just that it probably won't be as meaningful as some might think. It's more of a natural evolution to where I think both Microsoft and Sony were going, anyway, with a carryover framework for games, but with added PR spin.
