The rumour first surfaced last week, when 1Up reported the new console would be considered as a new platform, with new name, branding and packaging, and have all the Natal technology built-in.
Aimed at a mainstream audience to directly rival the Wii, the console is rumoured to be here next autumn and appear along shelves next to the current 360 – so there is quite a wait yet folks.
Microsoft has rather carefully responded to the rumours through Eurogamer, with a spokesperson stating: “I can confirm that Natal will run on Xbox 360 so no new console investment will be necessary.”
Far from an out and out denial, suggesting a new console won't be "necessary" almost suggests that a new console would be an option for those who wanted to fork out the cash.
What do you think? Does Xbox 360 need a revamp to stay on top of its game? Let us know your thoughts below.