The person, identified as a "reliable industry source" also told Kotaku that Xbox 720 will be able to play Blu-Ray discs, an option not offered on current versions of the Xbox. The next generation of Xbox is expected to be released later this year or early in 2013.
We've asked Microsoft for confirmation and comment. We'll update if they get back to us. So far most speculation about the new machine is just that, as Microsoft hasn't even confirmed if the new system will be called Xbox 720, or when it will be available.
Update: "As an innovator we're always thinking about what is next and how we can push the boundaries of technology like we did with Kinect," said Microsoft spokesperson Allison Milton. "We believe the key to extending the lifespan of a console is not just about the console hardware, but about the games and entertainment experiences being delivered to consumers. Beyond that we don't comment on rumors or speculation."
It was unclear how Microsoft planned to thwart people from playing used games on their consoles. Game publishers have long complained that the used game market erodes their bottom line, but users, who are expected to pay more than $300 for the new units, may bristle and turn to systems on which they can still play second-hand games.
Other rumors tied to Xbox 720 is that it will mark the debut of Kinect 2, Microsoft's highly-praised hands-free sensor. The newer version of Kinect would contain an on-board processor to better detect user motions, according to Kotaku.