Both models have solid-state drives to reduce loading times, support for hardware-accelerated ray-tracing and spatial audio, the ability to convert games to high-dynamic-range rendering using machine learning (Auto HDR), support for HDMI 2.1 variable refresh rate and low-latency modes, and updated controllers.

The lower-end, digital-only Xbox Series S, which has reduced specifications and does not include an optical drive, was designed to nominally render games in 1440p at 60 FPS, with support for 4K upscaling and ray tracing.

[6][7] By March 2019, further industry rumors had led to speculation of two consoles within the Scarlett family under codenames "Anaconda" and the low-cost "Lockhart" version.

[10] During a presentation at The Game Awards 2019, Microsoft officially revealed the design of Scarlett and its branding, "Xbox Series X", as well as a late 2020 release date.

[5] Microsoft pointed out that the Series S had been discreetly placed in the background of previous Xbox announcement videos featuring Phil Spencer during July 2020.

The remaining components—the heat sink, the electric shielding, the power supply, the optical drive, and the cooling fan—were then arranged in a Tetris-like fashion, according to principal designer Chris Kujawski, to achieve a compact form factor, resulting in the tower-like structure.

[30] While certain elements like the optical drive, air flow requirements, and heat sink size fixed certain dimensions in the overall form factor, they were satisfied they were able to end up with a square footprint for the unit.

[30] Xbox head Phil Spencer said that Microsoft was prioritizing high frame rates and faster load times over higher resolutions; the Series X achieves this via the better-matched capabilities of the CPU and graphics processing unit.

[5][41] Microsoft designed the Series S to easily fit inside of a small bag or backpack for portability and travel usage.

Microsoft found from focus group studies that players were split nearly 50/50 on the use of batteries versus recharging and thus gave the controller the option to use either.

[68] Spencer said that the Xbox Series X would likely not have immediate virtual reality (VR) support at launch, and that they expect that any VR support would be based on the Windows Mixed Reality components contained within the console's Windows 10 components, but was otherwise not a focus of the console's development prior to release.

[69] An updated Xbox Series S with a matte black finish and 1 TB of storage launched on September 1, 2023; the internal design remains otherwise unchanged.

The updated Xbox Series X, codenamed "Brooklin", would feature a cylindrical design that drops the optical drive, draws less power, increases internal storage to 2 TB, and improves wireless connectivity with Wi-Fi 6E.

[73] The new Series X models use a redesigned motherboard with a smaller system-on-chip, and replace its vapor chamber cooling mechanism with copper heat pipes.

[95] Microsoft has not placed any similar requirements on a soft transition for third-party developers and publishers, allowing them to offer Xbox Series X exclusives or other routes to upgrade from the Xbox One edition of a game, though Video Games Chronicle reported that Microsoft had urged publishers to keep the upgrade path free if they took that option.

[104] As Microsoft neared launch, they reopened the means for players to suggest additional games to add to backward compatibility, stating "Resurrecting titles from history often presents a complex mix of technical and licensing challenges, but the team is committed to doing everything we can to continue to preserve our collective gaming legacy.

[17][106] Work done by the Xbox Advanced Technology Group prior to launch was focused on how far into the backward-compatibility library they could take these improvements, including into original Xbox games, adding in features like HDR or improving the framerate of games that may have been programmed to be locked at a specific framerate.

[110] Microsoft is providing tools for developers to check the performance of their Xbox One games on the Series X and S consoles, which can suggest optimizations "as easy as changing three lines of code" to support the improvements in backward compatibility.

[112] Microsoft developed FPS Boost after finding that for many backward compatible games, the CPU and GPU on the newer consoles frequently entered their idle states even with the other enhancements in place, and so they sought ways to use the unused processing cycles to further enhance the older games' performance.

[114] In March 2021, Microsoft started testing the Auto HDR feature with Windows-compatible games and computers that meet minimal requirements supported through DirectX.

[115] In March 2020, Microsoft stated that despite the COVID-19 pandemic, they expected the Xbox Series X to ship by the end of 2020, though they were monitoring supply chains and the safety of their workers.

[116] Then, Spencer believed that while the hardware will continue to ship on time, games poised for the release window of Xbox Series X may be delayed due to the pandemic.

[127] Upon reveal of the Xbox Series X's vertical form factor, a popular Internet meme compared the design to a mini refrigerator.

[128] In March 2021, in collaboration with Microsoft, Dwayne Johnson offered smaller mini-fridges modeled off the Xbox Series X to promote his line of Zoa energy drinks; Microsoft's Greenberg stated that this was a trial run to see if the Xbox mini-fridge would have potential sales options beyond this promotion.

[131] Microsoft opened pre-orders for the mini-fridge in October 2021, with plans for distribution in December 2021 in North America and European markets.

[132] Microsoft announced a 1 TB Xbox Series S model in carbon black, which was released on September 1, 2023 at a price of US$349.

The lack of significant launch-day exclusive titles designed to show off the new hardware capabilities, as well as the familiar controller shape and user interface, was considered by some to be disappointing given the next-generation focus of Sony's PlayStation 5.

[134] Eurogamer's Richard Leadbetter stated "I love the hardware in terms of what I can potentially experience with it and the expert implementation of many of its forward-looking features—but a console is defined by its games, and in that sense, I still feel that I barely know the machine at all.

"[136] Gamasutra's Kris Graft and Chris Kerr said that "Microsoft has delivered two highly appealing entry points that can turn players into long-term customers, while at the same time erasing the idea of 'generations,' exposing people to more games, past, present and future.

"[137] In November 2021, Jordan Ramée of GameSpot acknowledged that Xbox Series X and S had begun to see higher-profile console-exclusive releases since their launch (such as Forza Horizon 5, and the third-party titles The Artful Escape and The Big Con), and that Smart Delivery was a "crucial" feature of the consoles—praising the system for being seamless and automatic unlike PlayStation 5, whose user interface "did not make it abundantly clear which version of a game you were choosing to download and play, occasionally resulting in players accidentally putting the PS4 version of a game on their PS5."