Could feature an always-on heart rate sensor.
Microsoft is planning to enter the smartwatch market with a sensor-orientated device that can measure heart rates and synchronise with iPhones, Android devices and Windows Phones.
The smartwatch will draw on technology from the existing Xbox Kinect device and will have a battery life of up to two days, according to Forbes.
It is not known when the watch will be released, but some sources indicate as soon as summer 2014.
A Microsoft spokesperson said that the company had nothing to share.
Following the release of Microsoft Office for iPad, the possible cross-platformed approach of the Microsoft smartwatch rings true of Satya Nadella's call for Microsoft's software to be available on all devices.
The heart rate sensor on Microsoft's watch will monitor the wearer's heart rate all of the time, unlike the Samsung Gear range of watches, where the user has to manually turn on that function.
Apple is also set to enter the smartwatch market this year with a possible release of the iWatch. Google also recently announced its entry into the smartwatch race by releasing Android Wear, a smartwatch operating system that will first be seen on the Moto 360 and the LG G Watch.