Microsoft is expected to launch its new Spring 2011 dashboard update for the Xbox 360 on May 19, according to reports.

The software giant will also introduce its Avatar Kinect service on May 27. Joystiq reports that a solid source has confirmed the two dates. The update will be distributed in six separate waves between May 19 and May 30 “to ensure a high quality deployment,” according to leaked documents. The spring system update will also include support for Microsoft’s new disc format and updated PayPal support. Microsoft will extend the PayPal payment option to new international markets alongside the dashboard update.

Perhaps the most eagerly awaited update is Avatar Kinect. Microsoft CEO Steve Ballmer originally introduced Avatar Kinect using his own Xbox LIVE avatar at CES earlier this year. Avatar Kinect is a unique way for Kinect users to interact with each other. Kinect supports facial tracking and even facial expressions that will allow users to talk to each other with their avatars. Microsoft is calling Avatar Kinect a “social experience” that will bring your avatar to life.

The software giant is providing over 15 different stages for users to pick from and use Avatar Kinect. The stages range from kids themed stages to performance and broadcast stages. Avatar Kinect tracks users mouths and eyebrows to animate their avatars live on the screen. Avatar Kinect will allow users to join sessions and chat with each other to create shows that can later be uploaded and shared with others.