After E3 Microsoft left gamers wondering if they would be able to play their Xbox games on their Xbox360 after refusing to answer questions on it. They did announce though that "the best selling" Xbox games would work on the future platform. Microsoft has now signed a deal with Nvidia, manufacturer of the Xbox chip which will enable Microsoft to port over games that wouldn"t be natively compatible with the new Xbox.
Following the confirmation of some backward compatibility people close to Microsoft explained that a form of recompilation (known as "transcompilation") would be needed in order for the backwards compatibility to work, Xbox PR manager Michael Wolf denied that games would need to be recompiled, and stated that Xbox had no intention of charging for updates to the backward compatibility service.
Microsoft plan to emulate the Xbox Intel CPU on the 360"s multiple IBM cores, and will also be able to emulate the Nvidia graphics to some extent onto the new ATI chip. It was not stated how many games would need further modification to work, and with 90% of Xbox owners not connected to the "Live" service it is unknown how people will be able to get the updates if they are needed.