According to Ohura, the "Xbox 2," as it has been so unoriginally dubbed by half the media (we prefer to call it NeXtBox; please laugh), will be much smaller in size than its predecessor. One of the largest complaints against Microsoft's current hardware is that its much too big. There was a theory that a lot of Japanese people would not buy the Xbox based off of its gynormous figure. While we think that's silly, apparently MS is taking some stock in it; they want everyone to know, Xbox 2 will be smaller.
Also, since Microsoft is betting on Playstation 3 hitting retailers in 2005, they're hard at work on developing strategies to counter the consoles impending release. Presumably, Microsoft wants to have its next-generation console out around the same time, to prevent Sony from having an enormous lead after a year on the market.