What we heard: The reports contain a few interesting pieces of information attributed to development sources, starting with the notion that the next-gen version of the Kinect--dubbed Kinect 2 by Eurogamer--will come with Microsoft's Xbox 360 successor and be able to read lips. The camera will also be able to assess a player's emotional state and determine which direction he or she is facing, according to the report.
The GamesIndustry.biz story also cites an unspecified source with word that the Kinect "is set for a significant upgrade and has a very strong likelihood of ending up bundled with the machine." The story goes on to say that "it's also believed" Microsoft will offer two versions of the hardware at launch: one stripped-down box for the casual market (with a likely emphasis on the Kinect and streaming services like Netflix) and another for core gamers with supposedly extraneous features like an optical disc drive, a hard drive, and backward compatibility.
A new Kinect for the next Xbox should be all but assumed at this point. Microsoft has been placing an emphasis on the peripheral and the casual market it taps into since its launch last year. The software giant is also clearly working on improving the technology behind the Kinect, as evidenced by the upcoming PC version of the hardware, which will be able to keep track of objects just a few feet from the camera.
As for whether or not this new camera would be "so accurate it can lip read," that's a significantly larger leap. Much like voice recognition, the problem of identifying something as subtle and analog as mouth movements and converting them into actual words isn't simply a matter of throwing more hardware power or a higher-resolution camera at the problem. It will also require a number of software hurdles to be cleared. The new Kinect camera may well have a resolution high enough to identify lip movements, but whether it will result in any actual incorporation of lip reading into the console experience is a different matter entirely.
The notion of a two-tiered setup for the next Xbox hardware is likewise uncontroversial, as it's fast becoming an industry standard. The Xbox 360 and PlayStation 3 have been offered in multiple SKUs for their entire life spans, and the PS Vita will hit stores in multiple configurations as well. There's considerably more obfuscation as to how those tiers would be set up, and whether or not Microsoft would be willing to completely hobble its casual offering to hit a mass market price point right out of the gate.
The official word: As of press time, Microsoft had not responded to GameSpot's request for comment.
Bogus or not bogus: Not bogus that there will be a Kinect hardware upgrade and multiple SKUs for the next Xbox, but the claims of lip reading and specifics of the SKUs are a bit shakier.