http://www.polygon.com/2016/3/1/1112...ncer-microsoft
Depending on how this is implemented, can see this being either a great idea or a horrible idea. The article makes it seem like people would be replacing or adding on hardware to their current box, like they do with a PC or maybe a Sega 32x or N64 ram upgrade. This would be a terrible idea.
What would be a good idea is to be more like the mobile market and release an upgraded box maybe every 3 or 4 years. The new box has new and better hardware but runs the same software and OS. The new box would be natively backwards compatible with all previous generation games. In addition MS would mandate that all current generation games would be forwards compatible with at least one generation ahead at lower settings.
So for example, let's call the current XB1 the Xbox 2013
This holiday season they release the Xbox 2016
Then 3 years from now they release the Xbox 2019
The 2016 will run all 2013 games (perhaps even upscaled to 60 fps and 1080p, but that would be up to the publisher to patch that in), and the 2013 would run all 2016 games only at lower settings. When the 2019 came out it would play all games released since 2013, and the 2016 would play 2019 games, but the 2013 wouldn't be guaranteed to play 2019 games. However developers would have incentive to make games compatible with the 2013 if possible because of a bigger install base.
People who want the best graphics could upgrade every cycle, the cost offset by their old systems still having value so they could be sold for more than old consoles generally are.
Average people could do the same thing most people do with cell phones and skip a generation.
And people who don't care that much about graphics could buy the previous generation every time and still play all the new games, just at lower settings.