Microsoft is to announce a successor to the Xbox 360 at E3 next month, according to "a senior, trusted, well-placed" source.
The tipster, speaking to respected games industry publication Develop, said the new hardware was sent to EA last month - and that the publisher is getting to grips with the tech right now.
It's said to be a "very early build with no casing - it is in fact being stored inside a PC shell".
"Quite often when new consoles come around they're packaged into a PC shell, but actually what's inside is an entirely new console," the source said.
"Why let Nintendo steal the thunder in June [At E3]? It doesn't want to lose momentum. That's why I think Microsoft is rushing to make an announcement at E3."
Develop has been led to believe that the new Xbox will feature enhanced support for Kinect and will launch by the end of 2012.
The site's source added: "Kinect will keep the 360 going for a couple of years, but Microsoft knows that if it slows down now it will face trouble."
In March, Microsoft said it was looking for a 'hardware verification engineer', a 'VLSI graphics architect' and a 'VLSI performance architect' for work on what sounded very much like a next-gen console.
[ Source: Develop ]