We previously reported on the changes that may be coming to the next Xbox. There’s an even bigger change coming if reports are to be believed.

CVG is reporting that sources close to Microsoft are claiming that the new controller for the Xbox 720 will “be a matt-black media hub with a mission to bring games to life in your living room with augmented reality, directional sound, and a four-player, finger-tracking Kinect.”

The sources claim that Microsoft is experimenting with a tablet-like controller that’s more comparable in size to the PlayStation Vita than the Wii U’s current tablet controller. It describes it as being “an HD screen surrounded by the traditional 360 buttons and sticks.”

“That touchcreen will be second only to Kinect in how you operate your console,” the source said. “It could be a remote control when you’re watching TV, a browser when you’re on the internet, extra buttons and information when you’re playing a game or a portable display when you want to take your game with you.”

Such a move would be costly as having a tablet controller is already causing speculation that the Wii U is going to be expensive despite it’s cheap internal hardware. To answer that question, the sources claim that the new Xbox would keep internal hardware costs low by going with a cheap CPU and GPU. If you already want to set aside money for the new Xbox, even though it’s two years out at best, you’ll have to pony up about $600.

The new Xbox rumors just keep pouring in which makes it plausible that an E3 2012 reveal is in the works. We’ll keep you updated on all the rumors that, if true, could make a huge splash at E3 this June.