Xbox 360's successor is clearly in the works, although it's debatable when exactly it'll be unveiled. In the meantime, reports continue to surface on what Microsoft has planned for its next games console. One of the newest reports comes from a source known as "MS nerd," who indicates that the next Xbox will be based on Windows 9 and an ARM architecture.
Moreover, it'll be much smaller and, importantly, cheaper than the existing Xbox 360, enabling Microsoft to better drive adoption of its hardware and the Kinect platform.
The MS nerd source is not just any blogger, as this person had accurate information on Microsoft's Courier, (the abandoned tablet project) well in advance, so clearly there's a connection here to Microsoft's Entertainment & Devices group.
Regarding the next Xbox, MS nerd wrote, "With a heady mix of rumors, tips and speculation, I am now stating that Xbox codename 'loop'(the erstwhile XboxTV) will indeed debut a modified Win9 core. It will use a Zune HD-like hardware platform—a 'main' processor with multiple dedicated assistive cores for graphics, AI, physics, sound, networking, encryption and sensors. It will be custom designed by Microsoft and two partners based on the ARM architecture. It will be cheaper than the 360, further enabling Kinect adoption. And it will be far smaller than the 360. It will also demonstrate how Windows Phone could possible implement Win9’s dev platform on the lower end."
For now, of course, take this information with several grains of salt, but it certainly sounds plausible.