With all of the rumors circulating about a surprise announcement from Microsoft at E3 where they are supposedly planning to steal Nintendo’s thunder with the announcement of the successor to the Xbox 360, we have continued to shake the trees and ask a lot of questions. We seem to be coming up with the same thing… it appears to be a lot of talk, but little more than that.

While a number of sites have reported an Xbox 720 development kit that was supposedly in a PC case that was given to Electronic Arts to start initial development work, our sources tell us that this is simply untrue; and if it were true they have seen no evidence to suggest that it exists. Sources continue to tell us that they have not been briefed by Microsoft on the existence of a new console, but recent pushes from Microsoft have been about Kinect, which the company believes will sustain the Xbox 360 for some time.

Analysts that we have spoken with seem to share the same belief and they also think Microsoft is focused on Kinect and not on the release of a new console yet. As one analyst told us, “Yes, I think Microsoft has ongoing development on the building of an Xbox 720, but they are not ready to announce it yet. Instead, we expect Microsoft to focus on Kinect by adding more enhancements and support for it as the current strategy. While everyone might wish that they steal Nintendo’s thunder by announcing a new console, it just isn’t going to happen.”

We will have to see how this plays out, but we don’t think Microsoft views the new Nintendo console as really that much of a threat because it really isn’t much more than what we have in the Xbox 360 and PlayStation 3. In addition, it is going to take time to ramp up titles for the potential release of a new console, and Microsoft has not been talking to other major developers about the existence of a new console; and so far our developmental sources continue to tell us nothing about the existence of 720 development systems at their studios.