Microsoft (NASDAQ:MSFT) unveiled its upcoming fourth-generation gaming console, the Xbox Series X, at the Game Awards in Los Angeles on Dec. 12.

Xbox chief Phil Spencer called the Series X a "dramatic upgrade from the Xbox One base console" in an interview with GameSpot.

Let's take a closer look at six key points that came out of the unveiling.

1. A big vote of confidence for AMD's chips

Spencer claims that the Series X will offer roughly four times the CPU performance of the original Xbox One, and about twice as much GPU processing power as the Xbox One X, its higher-end hardware revision from two years ago.

The Xbox One X runs on two AMD (NASDAQ:AMD) chipsets -- a custom eight-core Jaguar Evolved CPU running at 2.3 GHz, and a custom RX 580 GPU running at 1.2 GHz. This gave it a total compute power of six teraflops, compared to 1.3 teraflops for the original Xbox One.

The Xbox Series X.

Image source: Microsoft.

Microsoft hasn't revealed the official hardware specs for the Xbox Series X yet, but current rumors suggest that it will run a custom eight-core version of AMD's new Zen 2 CPU at about 3.5 GHz alongside a custom Navi GPU. Its total computing power should equal about 12 teraflops.

Microsoft's faith in AMD isn't surprising, since it switched from NVIDIA's chips to ATI/AMD's chips with the Xbox 360 in 2005, then continued using AMD"s chips in the Xbox One in 2013. Microsoft's main rival, Sony (NYSE:SONY), also used AMD's chips in the PS4, and it plans to continue using them in the PS5.

The support from those two console giants should significantly boost AMD's EESC (enterprise, embedded, and semi-custom) revenue over the next few years.

2. Going all-in on SSDs

The Xbox One X uses a traditional platter-based hard disk drive (HDD) with 1TB of storage. The Xbox Series X will reportedly ship with a solid-state drive (SSD) that stores its data on flash memory. It will be a non-volatile memory express (NVMe) SSD, which plugs directly into a motherboard's PCI Express slot and transfers data roughly four times faster than cable-based SATA SSDs. 

SSDs are more expensive than HDDs, but they're faster, smaller, more power-efficient, and less prone to damage. The capacity of the Series X SSD hasn't been confirmed yet, but it could be smaller than the One X's 1TB HDD, since 1TB NVMe SSDs cost roughly twice as much as comparable HDDs.

We still don't know how much the Series X will cost, but current estimates suggest that it'll cost about $500 -- the same price as an Xbox One X.

3. Next-gen memory chips

The Xbox One X sports 12GB of GDDR5 RAM, but that memory standard is now over a decade old. The Series X will reportedly use GDDR6 RAM, the new standard which only entered mass production last year.

GDDR6 chips transfer data at up to twice the speed of GDDR5 chips with the same power consumption, but they're also significantly pricier than their predecessors. Microsoft hasn't revealed the Series X's exact capacity yet, but current rumors suggest that it will sport 16GB of RAM.

A gamer plays a racing video game.

Image source: Getty Images.

Sony is also expected to install a similar amount of GDDR6 RAM in the PS5. This could be a tailwind for leading memory makers like Samsung and Micron, which both struggled with a supply glut, sluggish demand, and low prices for DRAM chips over the past two years.

4. Designed for 8K displays

The original Xbox One didn't support 4K resolutions, but the Xbox One X added 4K support. The Xbox Series X is expected to double that output with 8K resolutions.

8K displays aren't mainstream yet, but adoption rates are expected to rise over the next four years. This indicates that Microsoft is future-proofing the Series X for an entire console generation, which generally lasts about six years.

5. Virtual reality isn't a priority

Spencer recently told Stevivor that the Series X wouldn't be designed with virtual reality (VR) games in mind, since "nobody's asking for VR." Instead, Microsoft will likely focus on expanding its subscription and services ecosystem with Xbox Live, Xbox Game Pass, and its upcoming cloud gaming platform Project xCloud.

Meanwhile, Sony plans to continue supporting its PlayStation VR headset and growing library of VR games with the PS5. It's unclear if Microsoft plans to support VR games in the future, but the Series X probably won't feature any VR games when it launches.

6. Launching at the same time as the PS5

Microsoft will launch the Series X during the holiday quarter next year, which coincides with Sony's launch date for the PS5. This isn't surprising since the Xbox One and PS4 both launched in late 2013.

Microsoft and Sony are both counting on their new consoles to bolster their gaming businesses, which generated 8% and 21% of their revenue, respectively -- in their latest quarters. Both businesses are generating slower growth as the current console generation ends, but they should perk up again when the Series X and PS5 finally arrive.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.