Microsoft may change its hardware strategy, releasing an Xbox set-top box, or "Xbox TV," alongside a fully-fledged next-gen console. The less-powerful system would aim to compete with products such as Apple TV, providing users with both content streaming services and a casual gaming experience.

The report comes from “multiple sources familiar with Redmond's plans,” who told The Verge of Microsoft's supposed future hardware strategy. The system is rumored be a Windows 8-based, low-cost alternative to the full next-gen console, and would be equipped to provide access to casual gaming titles rather than the highly graphically intensive offerings found on the full console.

Microsoft has been improving its content streaming offerings with the release of key services such as Xbox Music. The release of a dedicated streaming system would be a logical extension of this, giving some credence to the rumor. The report also suggests that Microsoft will release both the Xbox TV and the full console in time for the 2013 holiday shopping season, a move that would likely disrupt sales of Nintendo's Wii U console which launched in the US earlier this week.

Microsoft has worked to improve its content streaming service with the release of Xbox Music

An Xbox set-top box might also be part of a wider strategy aimed at giving the new system's hardware cross-platform capabilities. The most obvious examples of this would be the integration of the core system's hardware into that of a tablet, smartphone or Smart TV, thus providing access to a wide range of Xbox Live features.

The Verge reached out to Microsoft for comment on the rumor. Redmond's response was decidedly non-committal, stating that “We are always thinking about what is next for our platform and how to continue to defy the lifecycle convention.” This seems to subtly suggest that if the Xbox TV project is in existence, then it might well see the light of day before the company's full next-gen offering.

Microsoft isn't the only company working to improve its media offering. Nintendo's Wii U console is arguably the first next-gen system to hit the market, and features a number of content streaming partnerships. The system also introduces Nintendo TVii, a service that turns the Gamepad controller into a program guide, remote control and social hub. Microsoft will surely be keen to increase its media offering and the functionality of its systems in order to combat this.

Source: The Verge