With Microsoft starting to invest heavily in its Game Pass subscription service, this latest report holds some credence. According to Thurrott, Microsoft is preparing two new SKUs for the Xbox One family of consoles. One version will be a revision to the One S with cheaper parts while another is a disc-less variant of the Xbox One.
Obviously this disc-less version means your existing library of physical games won't work on the console, but apparently, Microsoft has taken that into consideration. According to this report, Microsoft will be offering a "disc-to-digital" trade deal with participating retailers (with the article heavily hinting at Microsoft Stores). With this, you'll be able to trade in your discs for download codes, though there isn't any mention of games that have been delisted.
This disc-less version of the console is supposedly targeting a $199 MSRP, slashing $100 off the current retail price of an S. I'm not quite sure how removing a disc drive would cut costs that significantly, but Microsoft could be doing that to simply get people into the Xbox brand of consoles. The newer version of the S, on the other hand, doesn't have many details apart from speculation about cheaper parts.
I would take all of this with a grain of salt. A disc-less Xbox One does seem likely with Microsoft's push into digital distribution, but I wouldn't expect the company to drop disc support for its next console. I'm also not exactly sure what I think about the report claiming 2020 will be the launch of a new Xbox console. With the X having released only last year, three years would be a really short time frame for the supposed "most powerful" console ever made.