The latest rumors on Microsoft’s follow-up to the Xbox 360 suggest there will be two separate consoles. One will be aimed at hardcore gamers, with the other for a more casual audience.

According to the reports, the differences will go beyond the current variations in disk size. The cheaper version of the new console will be more akin to a set-top box. It will likely still support Kinect, and the games are likely to be download only, aimed at casual gamers. The goal would be to get some non-gaming content on board such as support for Netflix.

Meanwhile the more expensive version would be closer to the current design, containing both a disc drive and a hard drive. Unlike the cheaper version it would be backwards compatible with 360 games. There’s some talk it could feature two separate graphics chips, which could allow developer to create more realistic imagery in terms of shading and reflected light.

As might be expected, there’s a huge variation in the rumors about the console. For example, the names XBox Loop and Nextbox are both being bandied about, the former for the cheaper version. It’s also reported that the console or consoles could be on sale in time for Christmas 2012, with the first public demo at January’s Consumer Electronics Show.

However, there are also reports Microsoft is planning to use 28nm chips, which have only recently gone into mass production, raising some questions about the timescale. It’s been suggested the 2012 reports may be the result of confusion over Microsoft supposedly planning to include elements of Windows 8 in the console, which doesn’t necessarily mean it will show up any time soon.

Other indicators do suggest an advanced timetable though: it’s reported that major developers including Ubisoft have already received PC software that allows them to test games using what’s effectively an emulator of the new system, while a full-on prototype of the console is expected to be with them by Christmas.