Tech website The Verge has reported that hardware planning on the device - named the Xbox Surface - is underway after accurate specs were leaked back in June.
The new tablet will take the fight to Apple's recently released iPad Mini with a custom ARM processor and plenty of RAM - tailored specifically towards gaming.
According to the Verge, this new tablet will run a custom version of Windows rather than the full operating system found on the Microsoft Surface Pro.
So although standard tablet functions will be available, this will be a different beast from the Microsoft's other tablet creations.
Several Xbox-related buildings at Microsoft's office in Silicon Valley have been locked down to maintain secrecy - and allow other members of the Xbox contingent to begin work on games and software.
It's highly likely we'll see the Xbox Surface before the rumoured Xbox 720 gets any airtime.
Via: The Verge