The next-generation Xbox is currently being put together behind closed factory doors in the US.
This is according to IGN, which believes that the console – or at least a dev kit version of the console – is currently in the manufacturing stages.
There's been much speculation as to when we will see the first glimpse of the Xbox 720, but if it is indeed being created right now then maybe, just maybe, something will be ready to show off at this year's E3.
Microsoft: "We are always thinking about what is next for our platform and how to continue to defy the lifecycle convention."
Extend its lifecycle
"Prior to reaching the manufacturing stage, Flextronics created a new testing group separate from the rest of the company," explained the report on IGN.
"This team was solely dedicated to comprehensive marketing, software, and hardware tests of the next Xbox. With that activity concluded, Flextronics started building the hardware."
Microsoft has responded to the claims that it the Xbox 720 is on the way with the normal "we don't comment on rumour or speculation" but it also added a little more to its statement.
"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."