It claims that Microsoft will swap DVDs for Blu-ray discs, making the Xbox 720 a more rounded competitor to the Sony Playstation platform.
Another (worrying) rumour hints that Microsoft could introduce an anti-used game solution for the Xbox 720; its not clear how exactly this would work, but game developers and retailers have been endlessly complaining about the devastating effect the used games market is having on new games' sales.
Such a move could miff a lot of console owners looking to upgrade, and may well push them towards rival platforms.
Kotaku's soruces also back the claim that the successor of the Xbox 720 could be at least six times more powerful than the Xbox 360, with engineers trying to squeeze an additional 33 per cent performance increase.
The next generation gaming console - which ought to be introduced in 2013 - will almost certainly come with a new, smaller version of the hands free Kinect controller, which will likely feature an onboard processor to improve the detection of users' motions.