According to former Microsoft Gaming Vice President Ed Fries, a similar concept was considered during the creation of the first Xbox. Initially, a device was planned that would actually work like a Windows PC, but look like a console.
The idea was abandoned due to the technical limitations of the time, and a lack of RAM. Any resources given to the system reduced the amount of memory for games, which made the concept impractical.
Now Project Helix should give this idea a second life. Fries noted that modern devices have significantly more memory, so a hybrid of console and PC has become a reality.
If Microsoft implements the concept, it will be a return to the idea that appeared more than 25 years ago, but only now has the technical ability to implement it.