What we do (and don't) know about the new Xbox
Always-on, DRM, and used games
Perhaps the most debated rumor about Microsoft's successor to the Xbox 360 is that it would require an always-on internet connection and prohibit the use of used games. It's probably not that simple, but like many rumors, there's probably a grain of truth there that has been misreported, blown out of proportion, and misunderstood.
Here's how we think this will likely work. The new Xbox will not require you to be online merely to function. You probably have to bring it online when you first set it up to register the box and make an Xbox Live profile, but merely watching a Blu-ray movie, or a movie you previously downloaded, or playing a completely single-player game would not necessarily require you to be online. A more important question is: will all the titles be available to download at the same time they're available in stores, or are we stuck buying discs?
So, while the next Xbox will probably not need to be online all the time, it will probably support allowing developers to protect their games via always-online activation schemes if they want to. Publishers and developers are livid about losing tons of money to used game sales, and it wouldn't be a surprise for Microsoft to have something in the box to help curb them. And most of its best and most exciting features (streaming media, TV overlay stuff, new Xbox Live features) will be inherently Internet-based.
Every other week the rumor mill flip-flops on whether or not the next Xbox will play Xbox 360 games. One report went so far as to suggest that the Xbox 360 hardware would be shrunk to a system-on-chip and included in the new Xbox. That costly move seems like insanity.
We think Microsoft is going to make a clean break here. In order to really move forward with its online services and focus on the future, it's going to make the new Xbox incompatible with the old. It will keep selling the Xbox 360, at a cheap price, for another year or two. Now that the Playstation 4 has been announced as not compatible with PS3 games (the company may use an online game-streaming service to fill that gap), it's even easier for Microsoft to pull the trigger.
Speaking of online functions, we expect big things from the next iteration of Xbox Live. One recent report suggests that Microsoft will change friends lists to work more like Twitter, where you can follow someone without them necessarily following you back. This, together with abolishing the 100-person limit, seems like a very smart move. Sharing is sure to be a big part of the new Xbox Live. The new box may record a video buffer of your games as you play, allowing you to go back, select highlights, and post it to social media sites.
Achievements, one of the more successful innovations of this console generation, will almost certainly get an overhaul, too. Developers will probably be able to include more achievements, add them more often, tie them to real-life events or make them available for a limited time (e.g. "play this weekend for a special achievement!"), and even tie achievements together between games and between other Microsoft platforms. The cynic in me sees achievement awards on the inside of Mountain Dew caps already. (Achievement Unlocked: Do the Dew!)
Interestingly, scuttlebutt says that Microsoft intends to dump Xbox Live's own proprietary chat service in favor of Skype. This would be excellent news; not only does Skype provide dramatically better audio quality, but the prospect of cross-chatting with regular Skype users is enticing. And with a Kinect in every box, everyone could easily make Skype video calls from their living room.
Unfortunately, we still expect Microsoft to offer two tiers of Xbox Live service, free and Gold, with far too many services held back for Gold subscribers. There's no reason you should have to be a Gold subscriber to access Netflix or Hulu Plus, but Microsoft doesn't need a new console to bring that to an end. It could stop that nonsense at any time, and it hasn't yet.
Built on Windows 8 (not that it matters)
It is said that the software stack for the new Xbox will be built on the same foundation as Windows 8. Given the hardware architecture, that seems likely, but also unimportant. It's not as though it will actually run Windows 8 applications. The operating system would be highly modified, tailored for the task of running a set-top entertainment box, and controlled with game pads and Kinect.
Recall that the original Xbox ran an operating system based on Windows NT, and it's not like you could boot up Excel on it. The same situation applies here. WIth any luck, some of the core foundations and tools used by developers to make applications for Windows will carry over with little change, making developers' lives easier, but that's about all that matters. We'd be surprised if the common Windows 8 core was given more than a single brief mention on Tuesday, if it's mentioned at all.
Price and release date
Microsoft won't say; it's too early. We will certainly hear a vague release date like "in time for the Holiday season", with more specifcs about price and release date to come later. Perhaps at E3 in June, or even later. When the price is finally announced, we expect Microsoft to lessen the sticker shock by offering a subsidized pricing option: buy two years of Xbox Live Gold at a slightly inflated price, get the new Xbox for a couple hundred bucks less.
May 21 is only the beginning
Similar to the Playstation 4 event in February, Microsoft will give us the big picture, and leave out a lot of important details. It might even follow Sony's lead and refuse to show us what the actual box looks like, saving that for a later date. We'll hear more in June at E3, and even more after that.