Ask Microsoft about its future console plans and the company will pretend that the world revolves around the Xbox 360, that it "found new ways to extend its lifecycle" through the Kinect and other enhancements, and that any talk of an Xbox 720 is merely rumors and speculation, which the company doesn't comment on. Unofficially, however, Microsoft's next console may have entered the production phase.
Call it the Xbox 720, Durango, or the 'new Xbox' (to borrow a page from Apple) if you wish, the point is that this electronic creature, which Microsoft refuses to acknowledge, is being assembled by Flextronics at one of its facilities in Texas, IGN reports. Flextronics is the same company that built the original Xbox and is currently building Xbox 360 hardware, and citing un-named sources, IGN claims Flextronics recently moved beyond the test-group phase and is now building Xbox 720 / Durango / new Xbox hardware.
That doesn't mean you'll be able to buy a next generation Xbox console this summer or even in time for the holiday shopping season. IGN believes these early production units will end up as development kits for game designers to get familiar with the new hardware, and they'll have at least a year, if not longer, to do so.
It's also highly unlikely Microsoft would unveil any new hardware anytime soon. Microsoft already squashed rumors that it would announce another console at E3, and if recent reports prove accurate, Microsoft will soon be promoting a subsidized $99 Xbox 360 4GB + Kinect bundle with a 2-year subscription agreement that includes Xbox Live Gold service and other perks, plus an extended warranty.