Microsoft is building an Xbox set-top box. Multiple sources familiar with Redmond's plans have confirmed to The Verge that the company plans to introduce a low-cost alternative to its Xbox console, designed to provide access to core entertainment services. The move will allow Microsoft to further increase its presence in the living room, providing consumers with a choice between a set-top box or a full next-generation Xbox console.
Microsoft 'Xbox TV' device due in 2013 with casual gaming and streaming | The Verge