A report has appeared on a technology website that claims Microsoft and Toshiba are working on a new Xbox.
Insiders at Toshiba (owner of the HD-DVD patents) claim that Microsoft is working on a new Xbox that will incorporate a HD-DVD drive, a larger hard drive and new entertainment software.
The device is apparently being developed in response to "the PS3 driving sales of games software and Blu-ray content in several countries." A recent Sony study conducted in the UK, Australia, France Germany and Spain revealed that a big factor why consumers are buying a PS3 is because of the Blu-ray player.
This new Xbox device will be positioned as an entertainment hub that includes gaming and extensive wireless networking capabilities as well as 1080p playback. Games will also be played on it too.
It's all rumour and speculation at the moment and it doesn't take a genius to work out what Microsoft would say. Read the full report here.