The Verge has released a series of exclusives said to come from an anonymous source closely associated with Microsoft's upcoming Xbox products. Products? As in the next-gen gaming console and the set-top box rumored to be development since last November. According to the new rumors both pieces of hardware will feature extensive functionality tying the console, the internet and the television together.
Much like the Google TV set-top box, the next-gen Xbox will take in both a cable box signal via HDMI as well as an internet connection. With the two the Xbox will be able to provide extensive new features including an overlay for normal television watching and additional features as a result of Microsoft's partnerships with content providers.
Television functionality will come in addition to the already extensive rumored online features including the implementation of robust voice features due to the Microsoft's acquisition of Skype, Pando torrenting technology, and "cloud TV" services that allow communication between the Xbox and mobile devices or peripherals. Considering the scope of Microsoft's online plans, it's beginning to make a bit more sense why they'd want their hardware to be always-online.
Finally, as a last note, it's worth noting that these two pieces of hardware -- the "Xbox Mini" or "Xbox TV" and the next-gen Xbox gaming console -- will likely only be different in scope of hardware specifications. The smaller Xbox will lack a disc drive, but will perhaps be strong enough to run Xbox 360 games digitally. The larger Xbox will rock a Blu-Ray player and hardcore specs for next-gen games. Both will still be based around Microsoft's new online functionality.
Everything herein is still to be considered rumor until Microsoft says otherwise. Hopefully we'll hear more soon... the end of May, according to some other rumor.