The Xbox Next PC: Microsoft's PC/Xbox hybrid?

They've hinted at merging the Xbox 2 with PC gaming before, but this is huge: Microsoft is supposed to be testing the waters on an "Xbox Next PC", a $599 PC/game console hybrid that would be able to play all Xbox and Xbox 2 titles, as well as regular PC games and would come with a hard drive, a DVD/CD-RW combination drive, a regular Xbox controller, a remote control, a keyboard and a mouse. The one catch is that you'd have to use it with PC monitor or an HDTV, but that is becoming less and less of an issue for most people. No specifics on when this might come out, but probably not at least for a few months after the Xbox 2 hits stores next year.