Joystiq and Team Xbox are reporting the admittedly tenuous story that Microsoft are courting a developer made up of several members of the Shenmue development team and, whether it’s putting two and two together to make five or not, speculated that it could mean that Shenmue III is on the way for the Xbox 360.

Anyone who knows me knows that I’m nuts about Shenmue and the thought of it with the graphical acuity of the 360 just has me salivating. It’s probably my favourite series which makes the stunted ending of the series so far all the more tragic, but MS are probably thinking the same thing about the amount of money they blew securing Shenmue II as an Xbox title. It’s all speculation but it certainly could add up to a continuation or conclusion of the series. As a graphical showcase for what will certainly be a popular machine, and coupled with the cult following that the series has amassed it must be worth it.