The Xbox has always been pretty Internet-focused, but over its lifetime the Xbox 360 has become the media and social hub that Microsoft dreamed of in the early 2000s. There's just one thing missing: a real web experience. According to unsubstantiated claims from The Verge, the company is planning on bringing the ubiquitous Internet Explorer to the Xbox 360, adding it to the apps, television, streaming movies and music, and social functions already in place.
In order to facilitate easier browsing and navigation (because entering text with any sort of controller is a chore) Kinect functionality would be added for gesture and voice control. All of this would naturally be integrated with Xbox Live's social functions and Microsoft's Bing search engine, which is already integrated with the Xbox dashboard in an admittedly rudimentary fashion. According to the rumor, those without the Kinect add-on would still be able to use Internet Explorer, but the experience would be less than ideal.
How likely is all of this? Well, Internet Explorer has been steadily losing ground to Chrome and Firefox for the last few years, and Microsoft's Xbox division is one of its undeniable hits. Associating future versions of IE with the Xbox, especially as Microsoft prepares a push for it on the ARM version of Windows 8, could be advantageous. The PlayStation 3 and Wii both have browsers built in, though neither is as complete as Internet Explorer. With a successor to the 360 rumored for a late 2012 release, we'd guess that any major announcements for the current model would be released during E3 (June 5-7) or shortly thereafter.