Despite being one of the coolest features in Kinect, its voice recognition software was often overlooked in favor of arm waving shenanigans. That may not be the case with the next Xbox as Microsoft is rumored to be greatly expanding the software with new features and functionality.
The Verge reports that the next Xbox "will support wake on voice, natural language controls, and speech-to-text." The current Kinect can only recognize simple speech patterns that are pre-programmed into the software. The next Xbox will greatly expand this to include natural interaction - the kind of voice recognition that you see in Apple's Siri and other similar software.
So, what does this mean for games? The Verge uses the example of a user being able to ask the Xbox, "What are my friends playing?" and the system would immediately bring up the player's friend list. Other examples include the user being able to ask questions with the system returning a relevant answer, no doubt provided by Bing.
The real advantage here is if more games started supporting voice commands or interactions. The current Kinect's voice sensor has only been used in a small selection of games, most notably Mass Effect 3. It would be far more interesting if something like Peter Molyneux's ill-fated Project Milo were to launch on the next Xbox featuring natural interaction with an on-screen character.
This rumor is just the latest to hit the net in regards to Microsoft's next console. Just yesterday, a rumor came out saying that the next Xbox would feature an anti-used game system in the form of always online DRM. The console's specs, which paint the system as being fairly powerful, has also been leaked.