Microsoft plans to release the new XBox before Sony comes out with the Playstation 3 in 2006.
The XBox for 2005 has supposedly three IBM-designed 64-bit microprocessors. A ATI graphics chip faster than any available on the market. The new XBox will support HDTV. 256MB RAM which can be extended to 512MB.
Most likely no backward compatibility of Xbox games, which would be different from Sony's strategy. Microsoft seems also to be very concerned about cost of the new XBox. See more details in Mercury News Story.
We reported about the first New XBox rumors early January.