The dark satanic rumour mill has manufactured a hell on earth rumour with claims that Microsoft is planning two new Xboxes to replace the current 360.

The new consoles could arrive sometime in 2013 and will be based around the 28nm manufacturing process. Microsoft is apparently developing an entry-level system as well as a true next-generation gaming console.  Redmond already flogs  the 360 at multiple price ranges but the differences typically are slight.

However in this case the lower-end model will come at a low price and work like a set-top box. The report says this unit will target streaming media services like Netflix and cater to more casual gamers. But the mainstream Xbox 720 would be a true upgrade with an optical drive, hard drive storage and backwards-compatibility with existing 360 games and better upgrade. Rumours are that it will contain a six-core CPU, AMD graphics and 2GB of DDR3 memory.

Kinect will receive a boost too in line with what Microsoft is planning to do with Windows.

More here.