Microsoft forgot to mention that it technically is backwards compatible, if you purchase the software from them....
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E3: Xbox 360 "backwards compatibility" explained
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Ellie Gibson 05:07 19/05/2005
Current-gen Xbox games to be "recompiled" for Xbox 360
Following earlier indications that the Xbox 360 will only be backwards compatible with some Xbox games, Microsoft has admitted that existing software will need to be recompiled before it can be run on the new console.
The problem, it says, is down to hardware incompatibility - since the current Xbox uses an Intel processor, but the 360 will use IBM's PowerPC architecture, while NVIDIA's graphics solution is being replaced with an ATI one.
As many commentators have pointed out over the last few months, this means backwards compatibility problems. The solution Microsoft has reached is apparently to recompiled current-gen Xbox games so that they can be played on the 360. First on the list, it says, are the best-selling Halo titles.
The news has raised more questions than it answers, however, as it suggests that gamers may need to purchase titles they already own in order to play them on an Xbox 360 - and almost certainly means that only a sub-set of Xbox games will ever be playable on the new console.
Sony and Nintendo have already confirmed that their next-gen consoles - the PS3 and Revolution - will play all the games in their respective back catalogues, offering consumers a huge choice of titles at launch. Microsoft was unavailable for comment at the time of writing.