Cloud-based gaming could become the next big thing, and with Sony and Gaikai now acting all buddy-buddy Microsoft has to play catch-up. It may have found a breakthrough in reducing the lag, but if it truly has its way, that 360 dashboard you see above might find its way into your Internet browser.

Neowin reports that Microsoft has begun testing its own browser-based gaming architecture for Xbox which would allow people to play their favorite Xbox games right from their laptops or desktops. We're not sure if we'll be streaming from our consoles directly or from a central Microsoft server, but either way it's streaming Xbox games into the browser and that's cool.

There are a lot of unknowns, but those sourced in the Neowin report are saying that the service is running "right around 60FPS" and that this could be "the company's next killer gaming feature."

Microsoft working on browser-based Xbox experiences makes perfect sense in this new age of cloud computing. If it can somehow be the first to seamlessly implement playing streamed games into their repertoire, that could be a huge coup. OnLive tried it and it didn't really take off, and Sony hasn't really shown where they're going with Gaikai yet, so a preemptive strike from Microsoft would have crazy implications. We'll keep our eyes peeled for any updates on this story.