So back in 2004 or 2005 there was this console called the "Phantom Console" that was supposed to be released. For what happened to it nobody knows except the people that were doing the thing. The release date for it just kept changing. In the article from GameSpot there are people from 2006 talking about. This thing was bascilly the Duke Nukem Forever version of a console. For the time the game was nothing more than vaporwear until it came out. With the console it's almost the same thing except it never came out. The closet thing that came out to it are those Alienware consoles that are out now. For its time it was advanced. Think of it as the 360 or PS3 of its day. On it's marketplace you were able to buy games online and download them to the system which was something that became a thing for 7th gen. It had no CD drive so that was the only way to get games for the thing. The downloading thing was a good idea but due to internet speeds it would have flopped. It had built in wireless systems so you can use a wireless keyboard, mouse and controller on the thing. If you remember for the Xbox you had to get an attachment for a wireless controller to be used on it. So once again it was the 7th gen of it's day. It was also the Steam machine of it's day. Since it has no CD drive the only way to get games was like I said to download them. So the thing was pretty much the concept console for the Steam Machine. So Valve could have got the idea for their console from this.
Would it have made it if it had released? Most likely not if it didn't have that CD drive. Like I said the internet speeds for the day were too slow and the tech wasn't there for it to be dependent on just digital downloads. If anything it would have been the console version of a tech demo. The things it was going to be using were very advanced for the day or at least on consoles. No other console back then had wireless support built in and they didn't have the ability to be used with a keyboarded and mouse. For the specs they are listed in the first behind the system link.
For the games it was going to have all I know is what is being shown in that E3 video link. The first game is Unreal Tournament 4 and the other is some kids game. It's safe to say it would be playing the same games the Xbox and PS2 shared. For certain games like Morrowind it might have got that since it's a console version of a PC.

CNN article about it being a rival to the Xbox.

GameStop article about the redesign of the console.

Hardocp:
Behind the Infinium Phantom Console.
http://www.hardocp.com/article/2003/09/17/behind_infinium_phantom_console/2#.VMeSZKy-eSp
Inside the system articles:
Part 1 http://www.hardocp.com/article/2004/09/16/inside_infinium_labs_phantom_console/1#.VMbbHqy-eSp
Part 2 http://www.hardocp.com/article/2004/09/16/inside_infinium_labs_phantom_console/2#.VMbbVKy-eSo
Part 3 http://www.hardocp.com/article/2004/09/16/inside_infinium_labs_phantom_console/3#.VMbbXay-eSo
Part 4 http://www.hardocp.com/article/2004/09/16/inside_infinium_labs_phantom_console/4#.VMbbZ6y-eSo

Promotion video:

E3 2004 gameplay:

Unreleased info footage:

How have I not heard of this?

Huh, i never knew about this. Good thread.