Yeah, I don't think that will happen as it just makes no sense. What does make sense is the standard console "refresh" that has been happening since the PSone age. Moving the SoC to a smaller, more efficient and less money to build manufacturing process. [...]
An actually likely Xbox Series S refresh would look more like this: move the SoC down to TSMC's N5 process node, move to smaller/bigger memory chips (and therefore less overall of them, for more cost savings), put in 1TB of its flash storage, and finally keep the same $299 price. With the general drops in manufacturing prices for NAND in general, along with the smaller and cheaper SoC, smaller and cheaper and less memory chips, I'm guessing Microsoft would actually *improve* their profit margins while providing more value to the consumer at the same retail MSRP. Everyone wins haha
I don't think moving to a smaller process node will reap cost savings, at least not significant ones. Microsoft was very clear that, while in the past it helped with cost savings, this generation they think smaller processes may actually maintain (or even raise) the cost of building consoles. And Microsoft said that they felt that was true even before the chip shortage, and even before the current high-inflation environment.
Microsoft still intends to do it, because of the size and thermal advantages. But they don't anticipate it driving costs down. There's a great interview, on EuroGamer I think, where a Microsoft spokesperson explains that's *why* they made the Series S. They don't think the same opportunities to drive down Series X (or PS5) prices exist that there were in previous gens and, therefore, they decided to launch out of the gate with a budget option based upon the new architecture. They saw a budget option based on the new architecture (Zen 2, RDNA 2) as preferable to what's Sony's ended up having to do (make more last-gen consoles). As much as Sony says building more PS4s is due to shortages, it's also driven at least in part by the fact that not everyone wants to spend $400+ on a new console, as they didn't in previous generations where the last-gen consoles were often manufactured years into the new generation. Microsoft's approach of retiring last-gen production entirely should help retire the last-gen faster, whereas Sony's approach may help perpetuate last-gen support longer.