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Engadget broke the news of Microsoft working on a new and improved version of Xbox 360 which is codenamed as Zephyr. According to their source, it will have a 120GB storage space (now that’s exactly double of PS3′s highest model), HDMI port for TVs supporting 1080p and will be powered by a 65nm CPU. Check the working video of a prototype after the break courtesy – XboxScene.