You'll be able to use an Xbox controller hooked up to your mobile via Bluetooth, or if you want to dispense with that, Microsoft is promising touch controls that will work just fine as an alternative. In a post on the Official Microsoft Blog, Kareem Choudhry, Corporate Vice President of Cloud Gaming said the following.
Microsoft Corp. today previewed Project xCloud, an upcoming service meant to make video games that now require a personal computer or a gaming console playable on mobile devices. Today, Microsoft also revealed that they would be entering the fray with Project xCloud.
However, there are internal tests for Project xCloud going on right now. The test now runs at 10 megabits per second; Project xCloud can push the limits of 4G technology while being fully scalable for the upcoming 5G technology. Game-streaming services themselves are not new: Sony has its PlayStation Now service; Ubisoft is partnering with Google to have Assassin's Creed Odyssey stream in the Chrome browser; and Capcom's Resident Evil 7 is available on Nintendo Switch in Japan via streaming. However, Microsoft are also developing "a new, game-specific touch input overlay that provides maximum response in a minimal footprint for players who choose to play without a controller".
Project xCloud actually seems contradictory to Xbox's interests in a few ways.
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According to a press release from Microsoft sent out today, in 2019 the company plans to start testing Project xCloud, a streaming service where PC and console games, run on Microsoft hardware, can be streamed for play on a wide range of internet-enabled devices.
The company will begin public trials of xCloud will begin next year. In addition to solving latency, other important considerations are supporting the graphical fidelity and framerates that preserve the artist's original intentions, and the type of input a player has available.
First of all, Project xCloud will be a "multi-year journey" for the company, and Microsoft aims to leverage its 54 Azure regions across the world to deliver a great experience to all gamers, regardless of location. Targeting 4G and 5G mobile networks for portable play may seem impossible, but Microsoft seems confident that they can make it work.