A weekly Japanese magazine called WAM has reported that Microsoft is planning on releasing a newer Xbox called Xbox 1.5. The system is allegedly going to launch along side the MMORPG True Fantasy Live in Japan. According to the article the only thing known about the new Xbox is that it is going to be much smaller than its predecessor.
The magazine Dorimaga, a well respect Japanese video game magazine, has also reported that they caught wind of an Xbox 1.5 at E3. The rumor speculates that the release of an Xbox 1.5 is the reason that the Japanese market has not seen a price drop, as most territories have. Word has it that Microsoft will drop the price of the current Xbox when the newer Xbox is released in the land of the rising sun.
News source: Gamer Feed