>>> I wouldn't be entirely surprised if Microsoft and nVidia already have
>>> something ARM-based cooking for the new Xbox though.

>> A week ago rumours to that effect (sans the "nVidia" part) have started
>> to circulate: [...]
>> http://msnerd.tumblr.com/post/12233928364/clarity

> Well, it makes perfect sense, it fits well within all the communicated and/or
> rumored timetables, and goes totally in line with everything they have done
> and announced this far, so I think it's a very credible rumor!

There're also rumours to the opposite effect, not mentioning ARM at all:

"the chip itself is a little bit grey in areas. [...] IBM is also involved, so eDRAM is very likely, something our sources are all confirming. This means the CPU is very likely to be a PowerPC of one sort or other too. Then again, [...] there are strong and credible rumors of it being an AMD x86 core ala Trinity. In any case more SemiAccurate moles are still saying PowerPC, that architecture makes much more sense here."
http://semiaccurate.com/2011/12/05/exclusive-xbox-next-chip-just-taped-out/