Rumors of a possible Xbox smart TV solution has Google TV fans on the edge of their chairs. Recent rumors stated that this Xbox smart TV platform would directly compete against Google TV, acting as a mediator between your cable box and your TV and offering the power of the internet. We are nearing the next-gen Xbox announcement and more rumors are arising, further confirming that this secret project could come to fruition.

Wall Street Journal sources claim to have inside knowledge on these matter and affirm that Xbox is not only working on smart TV features. It seems Microsoft is also developing a set-top box that would act as the media King of the living room, while the Xbox would continue to stay focused on gaming.

The set-top box could offer a great streaming and smart TV solution for those who do not need a gaming console. We can also assume that this “Xbox TV” will be priced competitively. It should be around $100 or a bit more, or else Google TV devices will offer a better deal. That is unless Microsoft’s set-top box has some stunning features to offer.

It seems Microsoft is doing this carefully, as the same sources state that Microsoft has gone through multiple prototype devices. Some of these are Kinect-enabled, and we are pretty sure the final product will be too.

If Microsoft is, in fact, trying to separate its gaming and smart TV products, then Google TV will probably stay in the clear. My only concern is that the new Xbox could have these smart TV functions, in which case it could quickly beat Google TV. People will be buying millions of Xbox consoles either way, and they will stick with the console’s smart TV option if it is even close to being as good as Google TV. Step it up, Google!

[WSJ]