Xbox 2 Plans
A quick look at a non disclosure agreement was all that was needed to see what M$ plans for the Xbox in the coming years. The NDA shows that there are going to be three versions of the Xbox 2, one of which is a fully functioning PC in the coming couple of years.
The NDA plots a timeline for the introduction of the systems. Xbox Next and Xbox Next HD are planned for fall 2005, while the Xbox Next PC is scheduled for fall 2006.
The standard Xbox Next will not include a hard drive, which will allow M$ to cut costs on the basic unit while the Xbox Next HD, as you probably already guessed, does include a hard drive and will offer increased functionality.
Xbox Next PC is supposed to be an entry-level PC that runs Windows (of course) and all standard PC software. It also includes Burner, Wireless KB, mouse and game controller and will work best connected to an HD TV or PC screen. Media Center functionality is also included and plans also say that it will play most PC games.
System outline specs note that internet browsing and IM would be key apps and that the entire unit will be smaller than the current Xbox, although it will not be possible to upgrade the shipping memory or processor.

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