Treat this one with a heavy dose of salt, but some web reports are suggesting that Microsoft are set to launch a 120Gb black Xbox 360 around the same time as the PS3 launch.

The news comes from an Australian retailer called Myers , who said, "it’s now 100% official that the Black 360, (with black controller), 120gb hard drive and HDMI is due out in Australia for $749 AU in April. They will try to push this forward to late March to deter buyers from the March 23 PS3 launch.”

Microsoft unsurprisingly haven't announced the product and told gaming website MCV, “What we have delivered is the most powerful and affordable video game system on the planet today. And with games like Halo 3, Guitar Hero 2, Mass Effect, Grand Theft Auto 4 and Forza Motorsport 2, the story of the year on Xbox 360 is the games, not the hardware.

The rumours of a new Xbox 360 are also gathering pace on the official Xbox forums, where one poster claims to have attended a product knowledge day where the console was demoed.

Of course, it's all hearsay until Microsoft announce such a product, but Engadget also claim to have knowledge that the new 120 Gb console (codenamed Zephyr) will have a new cooler 65nm processor and a HDMI port for full digital 1080p.

Early Xbox 360 adopters may not be happy with an updated console so soon after release, but if it is true, we'll definitely be trading in our machines for the new one!

Sources: Engadget , MCV