Work starts on new XboxMicrosoft has confirmed it is working on future generations of its Xbox console. The computer software giant admitted new versions of its games console were in development, following reports it was planning to release a combined digital video recorder and games unit next year. Technology magazine Red Herring, which reported the move on Tuesday, also said that the Xbox had made huge losses. It quoted a source as saying that Microsoft had estimated it would lose $750m (£490m) on the Xbox game console in the year to June 2002 - and a further $1.1bn (£720m) in to June 2003. Xbox creator Seamus Blackley resigned in April Microsoft has refused to comment on the financial forecasts. But the company said in a statement: "Microsoft is committed to Xbox for the long term. "Weve made a substantial investment from a hardware standpoint and that investment is one that we remain committed to. "Were continuing to see great demand for Xbox worldwide. Were on target to meet our fiscal year forecast of 3.5-4 million units. Losses "We are very pleased with our progress. Microsoft is in this business to win and we plan to do that." The Red Herring article quoted author Dean Takahashi, who has recently written the book Opening The Xbox. He compared the reported losses with the estimate given to Microsoft chairman Bill Gates in 1999 that the Xbox project could lose $900m (£590m) over eight years. The magazine said that Microsoft was losing some $150 (£98) on each Xbox sold. Red Herring also said that Microsoft engineers had been at work for about nine months on a project combining the companys UltimateTV recorder with the Xbox. The new machine could be launched next year for a price of around $500 (£325), said the magazine. Microsoft is competing with Sony and Nintendo for a share in the global game market, which is expected to be worth $30bn (£20bn) in hardware and software sales this year. All three companies make losses on their hardware products, but make up those losses with sales of the more profitable software.