The next Microsoft console, previously dubbed Xbox 720, will be called Loop, feature a 'far smaller' design and be cheaper than the current Xbox 360, according to reports.
Xbox gossiper MS Nerd has posted on his blog that the Xbox Loop will be smaller and cheaper than the current model, and offer more Kinect integration, but he does not offer any speculation on when the new console might be available.
"With a heady mix of rumors, tips and speculation, I am now stating that Xbox codename 'loop' will indeed debut a modified Win9 core."
The blogger, who doesn't cite his sources, claims that the Xbox Loop will be "far smaller" and cheaper than the Xbox 360, while featuring "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 designed by Microsoft and two partners based on the ARM architecture. It will be cheaper than the 360, further enabling Kinect adoption."
MS Nerd also explains how Windows Phone could be integrated with the new Xbox: "It will also demonstrate how Windows Phone could possible [sic] Win9's dev platform on the lower level." This could lead to games being made available for Xbox and Windows Phone, or maybe a system where mini levels of the Xbox Loop game could be played away from the console on a Windows Phone smartphone.
Although there are no sources, MS Nerd has been reliable in the past and a replacement Xbox is definitely expected in the next couple of years - although Microsoft may be keen to hold out until 2015, thus giving the 360 a 10-year life span, as is traditional with games consoles.