Microsoft made a bold announcement a few weeks back, letting everyone know that they were not going to show their new Next generation console at E3 this year. The company said nothing about the possibility of introducing something new, however.

It could be that Microsoft will show a new Xbox Lite at E3, which sounds a lot like a project that we heard rumblings about some time ago. While details are beyond thin at this point, from what we have been able to piece together this Xbox Lite will be an ARM-powered unit that will arrive in 2013, with its sole focus to compete at the lower end.

Well-known Microsoft talker, “MS Nerd”, who in the past has been credited with leaking very accurate information about Microsoft’s upcoming plans, is credited with being the first one to break the story. Our sources, however, claim that the information is very similar to a project called “Xbox Loop” that Microsoft was working on to develop a low-cost, ARM-powered unit that would run a version of Windows for ARM, but primarily focused on Kinect.

The unit is rumored to cost an estimated $100 and will offer a number of the same sort of features and applications that we are seeing in devices such as the latest Roku and AppleTV models. The focus would clearly be on casual gaming titles similar to and maybe even compatible with those on the Windows Phone platform. So, it is obvious that it will not be playing games from the Xbox 360 library.

Our sources tell us that Microsoft very much wants to get into the sub-$100 market space with a device that makes sense, but at the same time offers features that people are buying these other devices for. Our sources seem to think that the root of this comes from the “Loop” project, but admittedly we have heard that project was scuttled some time ago. Hard to say if this is accurate or not, but let’s just say it would not surprise us either way.