June 12, 2008 - During a conversation with Shane Kim, the new Corporate Vice President of Strategy and Business Development at Microsoft offered very general commentary on the next Xbox console.

When asked if his new role includes looking at how Microsoft is going to transition into the next console, Kim said:

"How [do] you think about next generation? What is that next generation going to encompass? How are you even going to define that? All of that is part of the equation. What kind of geographic expansion do we need to see? Is the world more of an online world than a hardware-oriented world? I think there are some really fascinating opportunities in front of us."

While the statement offers no details, it does suggest that Microsoft is at least exploring the idea of launching a digital system rather than a traditional expensive piece of hardware.

We're likely several years from the next Xbox, so enjoy this brief statement. It may be the last we get for a while.

http://xbox360.ign.com/articles/881/881386p1.html

ummmm i dunno how to take this.....let's wait and see.

I doubt that a console based purely on digital distribution would ever work. I do however believe that by the end of it's lifetime the XBox 360 will at least dabble into it.

I do reckon in time we'll see full XBox 360 games being released on Marketplace to buy and download. Obviously those with Arcades / Premiums won't get anything / far at all but the Elite adoption rate will certainly go up and something like a digital service would definitely be justifiable.

Despite the shortcomings of the console's backwards compatibility, XBox Originals in it's form proves theres a market there to tap, we all know how well publishers are doing with the likes of Steam. It's inevitable this eventually works it's way even more into current consoles, and it seems like the 360 is technically speaking: the only console truly capable of allowing this to happen. 

One misconception that people have is that the next Xbox won't be called "Xbox 720".
Xbox 2 is called "Xbox 360". Compared to Xbox 1, which is simply called "Xbox", Xbox 2 is 360 times more than Xbox 1.
Now, it only make sense that Xbox 3 is also 360 times more than Xbox 2.
And that makes "Xbox 129600" for the next Xbox, namely Xbox 3.

If they go completely digital it'll be a hard sell to get games retailers to stock them. However I hope they do as it'll lead to a much more profitable industry.

MrMac: We won't see large downloadable games this generation. The savings from going digital aren't enough for cutting you're supply by such an amount.

Next generation it's a possibility, but remember this

You're aware that Microsoft generally makes a loss on each console sold, and makes up for it through software sales?
Are you also aware that retailers make very little profit on consoles, because they too make up for this through software sales.

So the price of the 720 is higher, although I suppose games would be cheaper

I always believed that MS will drop their Xbox project. This some way conforms that theory by stating they will release all games digitally. Games for Windows evolved. If and how they release the new Xbox however really isn't that much of a concern to me as a stockholder. The firm uprising of Mac and Linux and the failure of many live services (pc that is, before I get jumped by twelve year olds who don follow other tech news) makes me worry about the total financial picture more then a few billion more in losses in hardware. Losses in revenue for Windows is all the more concerning.

hahahahaha @ galaki

OT: im fully against complete digital distripution. Im all for it for live arcade and wii ware and for demos and stuff but nothing beats a killer game case display stacked up next to your console. full digital distribution would take away the trophies (game cases)

Retailer profits arn't counted as industry profits?

Here in Australia RRP for most Xbox 360/PS3 games is around $US100.  Accounting for taxes and scale economies, they can probably justify $US80 to be considered fair for me.  

Games are already overpriced.  Remove the need for retailer profit/distribution/packaging? Along with my benefits like second hand reselling and physical ownership?  I wouldn't feel anything over $US45 for a new high-budget title was justifiable.

ooo, well if they could be that cheap star craft it would be cool to have the games available digitaly and in cold hard material form for people who like the packaging (i love it!). Would you buy digital games if they cost the same as games now?