Microsoft has built several set-top boxes, but the company is not sure if they should launch the device. The set top boxes would provide access to the Xbox Live suite of applications, according to The Wall Street Journal. Supposedly the most recent iteration of the set top box allows Kinect-enabled gesture controls with a similar user interface as the new Xbox console being announced later this year. The new Xbox is supposed to arrive on May 21st.
Microsoft believes that the set top box can help the company gain more Xbox Live sign ups while staying competitive against other set-top boxes like the Apple TV and Roku. One of the major reasons why Microsoft is uncertain about releasing the set top box is because the launch of a cheaper device packed with the same video and audio applications may affect the demand of the new Xbox.
When Microsoft launches the new Xbox console, they will already have major competition with the Sony PlayStation 4. It is unlikely that Microsoft will announce the set top box at their May 21st event. More likely, it will be announced at E3 or Gamescom.