We haven't had a chance to fully test this product yet, but we've assembled this helpful overview of relevant information on it.
We want you to know right from the start that this device is only rumored at the moment. However, the rumors are strong enough that this one is leaning towards actuality. We’ll have more information come E3 2012.
The new device, momentarily dubbed Xbox Lite, will be a smaller device that would be similar to Apple TV. It’s supposed to be a compact device without an optical media drive (i.e. no discs) with a primary use of streaming videos, downloading games and social networking apps. The device will also work with the newer, PC-compatible version of Kinect that was introduced by Microsoft in January.
This device would couple with partners that Microsoft already has. Streaming ESPN, Netflix, Comcast, Verizon FiOS and HBO Go would all be available for streaming.
Again, this is only a rumor at the moment but we’ll have more details if or when this device gets revealed during E3 2012.