An industry insider recently released a series of tweets showing off an allegedly failed attempt by Microsoft to create an Xbox-branded smartwatch. In fact, the user managed to obtain what looks like a full box of the wearables and went so far as to get at least one of them turned on before performing a teardown on another. The images are interesting because Microsoft did eventually go on to make its own fitness wearable lineup, marketed as the Microsoft Band and Microsoft Band 2. The latter of those was released way back in 2015 and had a decidedly slimmed down look by comparison to what is shown in these new images. So this is probably a watch Microsoft was working on prior to the initial Band from 2014 and could even feasibly be the device that led to or evolved into that later wearable.
Having said that, there's really no clear indication as to whether that's the case and it's not immediately clear why Microsoft chose to use the Xbox branding for the watch. It is clear enough that the watch was intended to be a fitness wearable when viewing some elements of the user interface. However, Xbox is generally more closely associated with gaming rather than being a more general technology brand. Microsoft may have planned to use the fitness watch in conjunction with its Xbox platform, similar to what Nintendo has done with its Wii Fit platform and its dedicated pedometer. It's also entirely possible that the watch would have been a standalone fitness platform with built-in gamified fitness software or that the same would have been accomplished via a smartphone application - prompting the use of its game branding.
Looking at the watch itself and its interface, the oversized square case appears to be primarily comprised of metal and plastic. There are contacts on the back, which may suggest it was intended to be charged via pogo pins and a dock, though there was no charger included with the box, the source claims. The software, on the other hand, says it's in alpha. Despite that, the watch appears to use Windows' iconic square icon interface and includes a GPS connection and several fitness modes, as well as having basic clock functionality.