Microsoft merges its hardware and software divisions - OnWindows
Honestly I think this means that the Xbox will be rolled into the Windows OS - or to be more precise, not only will the Xbox be running Windows (maybe a gaming specific edition), but Microsoft may open up the Xbox platform allowing for third party developers to build compatible systems. So you can get a console from Asus or Dell and be able to plug it in and have the identical Xbox experience with all your games - heck, maybe you could build your own (but I don't know how Microsoft would enforce minimum requirements for games.
Hopefully you can then install games from Steam and such.
But this is all speculation, and I don't know what Microsoft is planning. But I think it makes sense to reinterpret the Xbox to make it more successful.