Microsoft is bound to play up the non-gaming entertainment features of the new console, focusing on streaming video, Skype calling, and deeper integration with other devices and services.
Much has changed in the video game landscape since Microsoft unveiled the Xbox 360 in 2005.
Back then, Microsoft was a clear underdog, hoping to cut into the leads held by rival consoles from Nintendo and Sony. The Xbox had a core following, to be sure. But it also had plenty of ground to make up.
When Microsoft reveals the details of the next Xbox on Tuesday, it will be sitting in a far more comfortable position. Just last week, NPD reported that 130,000 Xboxes were sold in April in the United States, making the Xbox the best-selling video game console in the country, the 28th consecutive month it's been in that spot. Consumers spent $208 million on hardware, software, and accessories for the Xbox in April, more than any rival console.
Catch CNET's live blog from Microsoft's Xbox event, starting Tuesday at 10 a.m. PT / 1 p.m. ET
That success put Microsoft in the enviable position of waiting to see what Nintendo and Sony would offer in their next-generation consoles before taking the wraps off its next Xbox. Nintendo launched its Wii U, complete with a tablet-like game controller that doubles as a second screen, last November, well ahead of Microsoft and Sony in order to get a jump on rivals and boost its sagging console fortunes. But gamer interest has been tepid.
Sony unveiled its PlayStation 4, which has a far zippier graphics engine and beefier storage than its 7-year-old predecessor, in February. It's likely to go on sale this fall.
Having seen its rivals play their hands, what cards is Microsoft likely to show Tuesday?
"There is no question it will have a big hard drive, a DVD/Blu-ray drive, a fast processor, and tons of memory," Wedbush Securities analyst Michael Pachter said of the next Xbox. "Microsoft has all the network support it needs to ensure a stellar multiplayer experience. What's left is software, non-game functions, and form factor."
And those non-gaming entertainment features may well be the centerpiece of Tuesday's media event. After all, Microsoft will hold a second media briefing just three weeks later at the giant E3 gaming conference in Los Angeles. That is the more likely place for it to focus on the games it's lined up for the next console and the features that will appeal to hardcore gamers.
It's also likely that Microsoft on Tuesday will go into detail about the streaming-media capabilities of the new console. Already, the Xbox 360 lets viewers connect to Netflix, Amazon Prime Instant Video, and Hulu, among others. It has partnerships with Major League Baseball, the UFC for pay-per-view fights, and CNET TV (which is owned by CBS Interactive, publisher of CNET News). Pachter thinks it's likely that Microsoft will offer Internet TV, that is, regular broadcast television delivered over the Internet, with the next Xbox.
There have been questions about whether the new console will require constant Web connectivity, something that's caused much consternation with gamers. The concern is that Microsoft will require connectivity for game installation, potentially undermining the ability for gamers to play second-hand titles that have previously been registered to others. Always-connected is seen by some gamers as Microsoft's way to thwart piracy at their expense.
But earlier this month, Ars Technica reported on an internal e-mail to the Xbox team, saying that the new console won't need to be connected to the Web for, among other things, "playing a Blu-ray disc, watching live TV, and yes playing a single player game."
The next Xbox will likely leverage other Microsoft products and services, and perhaps buoy some as well. Microsoft's SmartGlass app already allows mobile phones and tablets to become a second screen that can interact with an Xbox 360, turning those devices into remotes that can play, pause, rewind, or advance videos. Microsoft could well bake even deeper integration into the Xbox with Windows PCs and tablets, as well as Windows Phone devices.
Calling on Skype
Having acquired Skype nearly two years ago, Microsoft has been busily weaving that video communication technology into its products. The Xbox is a likely candidate for Skype integration as well, giving gamers a way to video chat with others during a game. And putting Skype on the next Xbox could open the door for easy video conferencing in consumers' living rooms, even when they're not gaming.
To make it more appealing, Pachter wonders if Microsoft will bundle Skype into the Xbox Live Gold service, offering free calls to phones, in addition to Net-connected devices.
While there has been plenty of speculation about the software and services that the next Xbox will offer, little has been leaked about the hardware itself. The original Xbox was a behemoth by today's standards, a muscle car of a console with a bulging top. The Xbox 360 slimmed down, with its iconic hourglass curves, a look crafted by Astro Studios in San Francisco and Hers Experimental Design Laboratory of Osaka, Japan.
Design continues to be a focus for Microsoft, and there's little doubt that the look of the next Xbox will have been painstakingly considered. After all, the device often sits in entertainment systems in gamers' living rooms, precious real estate that demands aesthetics.
Most analysts expect the next console to include the technology from Microsoft's popular Kinect motion-sensing, voice-recognizing controller. Launched in 2010, the Kinect opened up an entirely new genre of gaming to the Xbox. What's more, it gave gamers the ability to navigate through the Xbox universe with voice commands. The integration with Kinect will no doubt be deeper with the next Xbox.
As for the price, longtime Microsoft blogger Paul Thurrott reported that the console will cost $499, or $299 for customers who also buy a two-year Xbox Live Gold subscription for $10 per month. Thurrott, who didn't disclose his sourcing for the pricing plan, also accurately broke the news of the Xbox's May 21 unveiling date.
Microsoft has declined to confirm any rumors, instead encouraging fans to tune into the Tuesday event.
With the hardware work largely done, Microsoft is now left to rev up the hype machine in advance of the launch. Tuesday's event will draw scores of journalists, and Microsoft will air the event live over the Web, on Xbox Live, and on cable's Spike TV. And the shortcomings of Nintendo's Wii U have cleared the marketing path a bit for Microsoft and Sony.
"I think it will be hard to distinguish the core features of a new Xbox versus a PS4, and at the end of the day it comes down to marketing the message that your system is better," said David Cole, chief executive of market research firm DFC Intelligence. "I think it will be a marketing battle more than anything."
Let the next console war begin.