The first console model is the one that gamers have been waiting for and expecting. It will provide a true, next-gen gaming experience, allowing you to play all of the newest titles as well as any Xbox Live Arcade game. In addition to that, you will have access to all the latest and greatest apps that have recently taken the Xbox 360 by storm, allowing you to watch all of your favorite movies, listen to music, catch up on all the latest sports scores and more.
The other version is targeted more toward the casual gamer. It will use Windows 8 as the basis for its operating system and will be unable to run any Triple-A titles, which means no playing the latest Halo, Gears of War or Call of Duty games. It will, however, be able to play downloadable games from the Xbox Live Arcade marketplace. In essence, this version will function like a set-top box and give you access to the growing variety of Xbox entertainment apps, like Netflix, Hulu Plus, ESPN, Vudu, etc... There are also reports of an "instant on" feature that will allow you to resume whatever you were doing with little downtime.
These new reports come from The Verge, which cites multiple sources that are "familiar with Redmond's (Microsoft's headquarters) plans."Moreover, The Verge also claims that this two-model approach is part of a larger strategy by Microsoft to ensure that its core Xbox software is scalable to run on a plethora of different devices. There are even rumors of having a Microsoft phone that delivers a full Xbox Live experience, though that is probably a long way away.
This marketing strategy by Microsoft is actually quite brilliant. It allows the company's console to appeal to two completely different cores of consumers. On the one hand, hard core gamers longing for the good ol' days when a gaming console was strictly used for gaming will be drawn to the traditional model, while people who really just want an entertainment hub and something to play fun games with family or friends can have that too, presumably at a lower price point. Both models are expected to be announced sometime in 2013 and become available before the end of that year.