According to some informal soures, Xbox 2 is said to be launched for Christmas 2004. But Microsoft apparently still has hopes to get the new console out in mid-2005, ahead of the Christmas 2005 release anticipated by most commentators.

A launch in mid-2005 would probably give Microsoft a full year's head-start on Sony's PS3, and possibly even more, as some commentators have suggested that Sony could allow the PS3 to slip further.

One consequence of Microsoft's eagerness to launch a next-generation console so soon is that the firm has allegedly encouraged developers to move to next generation development ahead of schedule. While few if any companies have moved their PS2 teams onto PS3 projects as yet, discussions with developers over the past week have revealed that quite a few are wrapping up work on the Xbox with their current projects and are moving on to Xbox 2 development.

Leading game developer Bungie announced that they are are moving on to Xbox 2 development, while UK-based Rare is already working on Xbox 2 software.

According to some sources the specifications of the Xbox 2 will be the following

-P4 3.5GHz CPU with 64KB of L1 cache and 1MB L2 cache
-256MB RAM
-500MHz graphics chip probably based on ATI's GPU