Microsoft is likely to pursue a two SKU strategy for its next Xbox console.

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That's according to a Digital Foundry report on, which says the platform holder is expected to take the two model approach much further with its new console.

It will reportedly offer a "pared down system 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".

This would be released alongside "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", the site adds.

It also claims Kinect is likely to receive a significant upgrade, and will more than likely be bundled with the console.

When the next Xbox will be announced and released has recently been the subject of heightening speculation. Microsoft is rumoured to be planning to make the first official announcements about its next-gen Xbox at the CES expo in January 2012, while Edge has heard from sources that the system may launch as early as next year.

Sony has clearly been keeping an ear on all the speculation, with European PlayStation boss Jim Ryan saying this week that it would be "undesirable to [launch] significantly later than the competition".

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source: Xbox News: Two Xbox 720 models reportedly planned -