Confirmed details of the next-gen Xbox console have not yet been released by Microsoft. The information below is therefore subject to change.
If you thought the original Xbox was something special, the next-generation follow-up is going to blow your mind. As with all the next-gen machines there are few confirmed details as yet, and we don't even know exactly what it's going to be called--Xbox 2? neXtbox?--but Xbox 360 seems to be the current best guess. You may also hear it referred to as Xenon, which is its current codename at Microsoft.
The key technical specifications of the console have been strongly hinted at--but they're unlikely to make much sense to any but the most technical. If the rumoured three 3GHz PowerPC processors and 500 MHz graphics card come to pass, the new Xbox will be more powerful than even the most expensive PC. There's also speculation that the machine will have a standard resolution of 1280x720 pixels, specifically engineered for high definition televisions, and an optional EyeToy-style camera.
The one thing it won't have, if the rumours are to be believed, is a hard drive--game data is allegedly to be stored on 64Mb memory cards. However, a hard drive is expected to be offered as an optional extra and there may even be a second, deluxe version of the new Xbox with the hard drive built in. Some rumours even suggest a third version of the console with additional PC-style functionality.
Xbox Live will undoubtedly be expanded further; Microsoft have already announced a new marketplace for gamers to sell custom content (weapons, vehicles, skins, etc) and for publishers to sell additional content including episodic games.
Microsoft haven't yet commented on backwards compatibility for the new console. At the moment it's thought that the new machine will not automatically play all old Xbox games but that there will be limited support for some of the biggest titles, such as Halo 2.
On the question of games there have been no official announcements as yet. However it is widely rumoured that there will be no new Halo title available at launch, as it's been too soon since the last one. The same rumours suggest that the reason for British developer Rare's apparent hibernation during the current Xbox generation is that Perfect Dark 0 will in fact be the new Xbox's main launch title, accompanied by Project Gotham Racing 3 and Dead or Alive 4.
In terms of other titles Microsoft seems to have addressed the lack of support from Japanese developers--one of the main complaints against the original Xbox--with Final Fantasy creator Hironobu Sakaguchi signed up to create exclusive games, as well as Rez designer Tetsuya Mizuguchi and Resident Evil and Street Fighter stalwart Yoshiki Okamoto.
The final question, then, is when will it be released? Microsoft have always insisted that the new Xbox will be the first next generation console to be released, beating the PlayStation 3 and Nintendo Revolution to release, and the very open secret in the games industry is that it's likely to be out in the US this Christmas. Rumours also suggest that it will be out at the same time in Europe, although that has yet to be hinted at by Microsoft themselves. All will be revealed on May 13, though, when a worldwide launch event is broadcast on MTV at 8pm UK time...