Microsoft is definitely working on a new generation gaming console but it would not launch in 2012.
Sources are reporting that the launch could take place sometime next year probably near the holiday season.
A company representative said that Nintendo is on a totally different release cycle which seems to work well for them. Microsoft sees no need to launch anything this year to compete against the Wii U model which would go on sale before the end of the year.
Microsoft Xbox 360 continues to do well especially with the launch of new accessories like the Kinect.
The company is said to be developing new hardware powered by the Kinect technology like set top boxes for television sets.
There are also reports that some laptops loaded with Windows 8 might come loaded with Kinect technology for gesture recognition.