Next generation to arrive in 2012

Ubisoft Montreal is hard at work on 'target boxes' based on the intended specifications of Microsoft’s Xbox 360 successor, according to an Edge source. Delivery of the first iteration of genuine devkits, running custom hardware, is expected to reach studios before Christmas, and all signs point to the finalised console arriving at retail in late 2012.

Ubisoft’s teams are said to be working on PCs containing off-the-shelf components provided by Microsoft, and it’s our understanding that several other major developers, including certain EA studios, are also in possession of these target boxes. While our source was unable to share precise specifications, it is believed that AMD is providing the bespoke GPU solution for Microsoft’s console. A Ubisoft spokesperson said: "We do not comment on rumour and speculation."

We can also reveal that one major Sony-owned studio has now ceased PlayStation 3 development, its entire focus having shifted to the console’s successor. The studio is also said to have been involved in the development process of the graphics technology adopted by Sony’s new hardware.

It is clear that both Sony and Microsoft have learned from their respective experiences this generation and recognise the importance of being first to market. Despite rushing Xbox 360's release - games shown at E3 2005 were running on overheating Power Mac G5s, just six months prior to the console's launch - Microsoft would no doubt view the billion-dollar loss caused by the RROD fiasco as more than justified by the console's eventual market share.

Sony, too, will have learned a painful lesson from coming to market a year after its competitor, with more expensive hardware. That the runaway leader of the previous generation is only now closing in on Microsoft's sales - 55.5 million PS3s had been sold by September 30, with Xbox 360 sales at 57.6 million - speaks volumes of the importance of not giving its competitor another head start.

A 2012 release would also do much to stop Wii U gathering momentum. While Nintendo's new console is significantly more powerful than its predecessor, it boasts little improvement over the current generation of HD consoles in terms of raw processing power.

Wii U has been positioned to developers as a suitable home for Xbox 360 and PS3 ports, and putting new consoles on shelves next year could leave Nintendo scrambling for thirdparty support. Reports this week claim that Microsoft could announce its console at CES in Las Vegas in January; Nintendo is not to reveal the finalised Wii U hardware until E3 in June.

Evidence of an approaching new generation of consoles has been building for some time. Square Enix announced its next-generation Luminous Engine in August, and showed it off last month, while Epic Games demonstrated an enhanced version of Unreal Engine 3, which VP Mark Rein said brought "unprecedented levels of realism and demonstrates what the next generation of gaming will be", at GDC in March.

Internet sleuth Superannuation last month found four Microsoft employees whose LinkedIn pages referenced the next-gen Xbox, and just last night discovered a casual forum reference to Kinect creative director Kudo Tsunoda's "NextGen team at MS".

Square Enix's worldwide technology director Julien Merceron told us in June that companies prepare for new hardware by moving their best talent off current projects. "In the next year and a half or so we'll see a drop in innovation," he said, "because the talent is moving on to something else."

Ubisoft Montreal is currently recruiting for a senior animation programmer, with one of the job's responsibilities the creation of a "next-generation animation system." Yves Jacquier, executive director of production services at the studio, said in July that AI, rather than better graphics, would be the "real battleground" of the next generation.

"Our challenge with the PlayStation 3 and Xbox [360] is that we're extremely limited in what we can do," he said. "It's a challenge for the engineers to provide nice graphics and nice AI and nice sound with a very small amount of memory and computation time.

"We think that the next generation of consoles won't have these limits any more." It appears Jacquier knew more than he was letting on; there is now a very real possibility that all three platform holders will have new consoles on sale this time next year.