When the original Xbox hit shelves in November 2001, it forever changed the videogame world. Before Microsoft stepped into the market, the idea of a hard drive in a console system was the stuff of fantasy. The shooter genre was trapped solidly on the PC. And while plenty of companies had talked about implementing an online component, none had found a formula that worked.

You probably know the rest of the story. These days, the Xbox is a leader in the North American console space — even outselling Sony’s PlayStation 3, something no one would have bet on 10 years ago. The progress is admirable, but it raises a question: What does Microsoft have in mind for an encore?

Kinect to the Future 
“We’ve come a long way in the past 10 years, but I’m even more excited about what’s in store for the next 10,” says Phil Spencer, corporate vice president of Microsoft Studios.

Not surprisingly, Spencer didn’t divulge any details about the next-generation Xbox — or Xbox 720, as it’s being unofficially referred to — but industry leaders say there are plenty of hints out there about where Microsoft wants to take the brand.

The biggest of those is Kinect. Adding motion control in 2010 to the Xbox 360 not only gave Microsoft an entrée into the casual gaming market, it added a science-fiction flourish to the system. The hands-free interface is certainly going to become more integrated into the Xbox brand, but don’t expect the traditional controller to fall by the wayside. Spencer says Microsoft will continue to develop for both and encourage publishers to do the same.

Instead, it’s Kinect’s ability to recognize players on sight that’s raising excitement, since it allows for a much more personalized console experience than what’s currently offered.

“We’re seeing a little glimpse of the future with Kinect,” says Yannis Mallat, CEO of Ubisoft Montreal. “Everything should revolve around the player — up to the point where we can immerse him within the experience. I want my [Xbox] to tell me ‘Hey, welcome back! I’ve done this for you while you were away.’” Part of the key to that is a 24/7 connection to the Internet — with automatic system and game updates (instead of making players wait idly on their couch as a status bar crawls across the screen). Mallat says he imagines a time when he’s able to sit down in front of his Xbox and the console will automatically bring up everything he’d normally be interested in.

This could mean anything from notifications about games he’s playing on Facebook to people on his Friends list besting his score in an online competition. It might even let him know that it’s in the process of downloading the latest episode in a favorite TV series via a season pass. Having a system that revolves entirely around you as an individual, not as a demographic (as the current Xbox dashboard does), is essential, Mallat says, for Xbox to be the go-to entertainment system for all people — core gamers and mainstream audiences alike.

“Xbox should not be a destination; it should be a portal to who I am,” he says. “If you make the hardware totally transparent and customizable [to me as an individual], then there’s no barrier.”