Additionally, the Lite will run all games, media apps and support the Kinect, making it a fully functional Xbox console, at a $100 price point not seen on gaming consoles since Sony dropped the price of its PS2 to $99.
The device will come before (or possibly alongside) the rumored next-generation Xbox Next (Xbox 720/Durango), which is expected to be a powerhouse and will likely launch with a hefty price tag expected to be above $500.
Microsoft did not deny the rumor, but rather left with the standard "no comment:"
The Xbox 360 has found new ways to extend its lifecycle like introducing the world to controller-free experiences with Kinect and re-inventing the console with a new dashboard and new entertainment content partnerships. We are always thinking about what is next for our platform and how to continue to defy the lifecycle convention. Beyond that we do not comment on rumors or speculation.