Over at Kotaku they heard Microsoft is working on two Xbox 720 consoles. One model will focus on being as cheap as possible, it will be positioned more along the lines of a set-top box and may be targeted as a Kinect-themed gaming portal, while a more fully-featured Xbox 720 is expected to deliver an optical drive, a HDD and backward compatibility with the 360.

"It's...believed that Microsoft will continue its successful two SKU strategy", the story claimed, "and indeed take it much further with its new platform: a pared down machine is to be released as cheaply as possible, and positioned more along the lines of a set-top box (the use of 360 as a Netflix viewing platform in the US is colossal) and perhaps as a Kinect-themed gaming portal, while a more fully-featured machine with optical drive, hard disk and backward compatibility aimed at the hardcore would be released at a higher price-point."