There's a Microsoft HomeStation article on PC Format (thanks Shacknews) that relates a scoop/rumor from this month's version of their print magazine on HomeStation, codename for a product they call "Microsoft's secret son of Xbox." According to the story, this would seem to be a home entertainment console capable of playing both PC and Xbox games, that will also "dish out movies, music, messaging, games and TV programming" served up by a Microsoft .NET server, while simultaneously serving as a digital TV recorder with a wireless interface for portable devices "such as digital cameras, PDAs, MP3 players and telephones using HomeRF or Bluetooth protocols" (what, no dishwasher?). Here's a bit more from the story:

Microsoft is working on a top-secret home entertainment device code-named HomeStation. The PC/Xbox hybrid will run a version of Windows to form a home entertainment hub. The device will finally turn the idea of digital convergence into a living room reality. Following in the footsteps of the PC-influenced Xbox, the device is likely to be a non-upgradeable sealed unit, with a system board based on nVIDIA's nForce, boasting GeForce graphics and Dolby Digital sound. HomeStation will come equipped for an array of online and offline activities: a sizeable hard drive, broadband connection and compression technology based on Windows Media Player 8 - included with Windows XP - all point to a video-on-demand role.