It is absolutely a completely new system and will be out at the end of this year (officialy, though accidentally, leaked by EA recently). IBM is making the processor for the new system based on the PowerPC architecture (meaning people who develop games for the Microsoft system are working on Apple workstations, I believe). ATI is making the graphics chip for them. Trust me, Microsoft is not being tight lipped on this. It is a brand new system (and if it wasn't Microsoft could NEVER hope to compete with Playstation 3 or Nintendo's next system.