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Is there a PC / Xbox 2 combo in the works?

Rumors are a wonderful thing online.  The latest buzz is some research conducted on behalf of Microsoft related to a machine capable of playing both Xbox and PC(Windows) platform games.

The B/R/S Group, a California-based market research company that lists Microsoft and the Xbox division specifically as clients, has been gathering consumer feedback on a device it refers to as Xbox Next PC – "a videogame console system with a hard drive and a built-in fully functional PC." Mention of the device came on one of several slides shown to focus groups.

"There will come a day – in the not too distant future – that [PC] games will be interchangeable between Windows and the Xbox," Moore [Peter Moore, corporate vice president of worldwide marketing and publishing for Microsoft's home and entertainment division] told [CNN] at the recently completed E3 trade show.

The supposed price point for this hybrid machine is $599.  Significantly lower than the $5000 some people will pay for super-powered gaming PCs.  Leaning the Xbox against the distribution of Windows games, and Windows itself, would be a serious competitive move.  What OS will Sony choose?

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