Microsoft could be preparing two gaming consoles to replace the current-generation Xbox 360, according to industry sources. It is believed that the new consoles could arrive sometime in 2013 which would give Taiwan Semiconductor Manufacturing Company (TSMC) ample time to test and refine their 28nm manufacturing process.

Redmond is said to be developing an entry-level system as well as a true next-generation hardcore gaming console. Multiple consoles aren't a new idea as Microsoft sells the 360 at multiple price ranges but the differences typically are minimal: various capacity hard drives, limited edition offerings and game and accessory bundles.

The lower-end model will come at a very low price point and positioned much like a set-top box. The report says this unit will target streaming media services like Netflix and cater to more casual gamers, described as a Kinect-themed portal.

The mainstream Xbox would be a true upgrade in every sense for hardcore gamers, featuring an optical drive, hard drive storage and backwards-compatibility with existing 360 games. Such a system would carry a premium over the entry-level model, with price and graphics performance reflective of it.

It is also believed that Kinect will receive a substantial upgrade, perhaps in line with what Microsoft is planning to do with the Windows version sometime next year.

We could see hard evidence of the next-gen console as early as January at CES. Rumors suggest the 720 could contain a six-core CPU, AMD graphics and 2GB of DDR3 memory.