Rumors are already circulating that there might be a new Xbox console in development. No, this isn't a full-fledged system... but rather an upgraded Xbox 360. GameDaily is reporting that this new and vastly improved console, codenamed "Zephyr" as opposed to the original codename "Xenon," could feature an HDMI output, and a significantly larger 120GB hard drive.

The HDMI port would allow the system to get full 1080p resolution, and "remove" any worry about digital rights protection getting in the way in the future. This is something important to note since that protection could be added (and likely will be added) at anytime on HD-DVD movie discs. The larger hard drive will also be necessary as the Xbox Live will allow for downloads of movies and TVs in the near future. That 20GB hard drive is suddenly feeling mighty small.

All this leaves us asking why didn't Microsoft consider these issues before releasing the system? What does this mean for owners of the original Xbox 360, not to mention those upgrade with the recently released HD-DVD drive (will it even work with the new "Zephyr" version)? No word has been announced as to whether current systems can be upgraded, or if the improved version will feature the HD-DVD drive built-in.