In a break from its usual refusal to comment on rumours, Microsoft has branded stories carried by this and other sites relating to the company's plans for Xbox 2 as "pulp fiction" - but has failed to deny the stories, or to back up its allegations.
A statement apparently issued in response to our report earlier this week that Xbox 2 would not be backwards-compatible describes recent reports on Xbox 2 as "nothing more than pulp fiction" and says that "this media conjecture is irresponsible."
It goes on to question the credibility of sites reporting on Xbox 2, saying that "the credibility of any publication willing to compromise fact in favour of a catchy headline must be questioned. Xbox fans are smart enough to distinguish truth from sensational reporting."
However, at no point does the statement deny the accuracy of the story - saying only that "Microsoft hasn't made any announcements regarding the next generation, so it's far too early to speculate about specifics." In other words, if it's not an official Microsoft announcement, it's "irresponsible" to report it.
GamesIndustry.biz absolutely stands by the accuracy of its reporting on the backwards compatibility of the Xbox 2. This story was not "speculation" - it was based on comments made by an extremely senior member of the Xbox division at Microsoft, which were conveyed to journalists working on this site by a well-placed source close to the company.
At present, the technology to emulate Xbox hardware on the proposed Xbox 2 hardware simply does not exist - a fact which is acknowledged by a document released today which purports to be a leak of a white paper on the Xbox 2 ("Xenon") specification for developers.
"Although the architecture of the two consoles is quite different, Xenon has the processing power to emulate Xbox," the document claims. "Whether Xenon is backward compatible involves a variety of factors, not least of which is the massive development and testing effort required to allow Xbox games to run on Xenon."
This should come as no surprise, given that the Xenon hardware is based on the PowerPC G5 architecture. While Microsoft has successfully emulated the PC on previous PowerPC chips, albeit at a significant performance hit, it has not yet succeeded in doing so on the G5 - the first PowerPC chip to drop the x86-style "little endian" processing mode entirely, thus rendering the processing of x86 applications much more difficult.
Another factor may be the change from using NVIDIA as a GPU supplier to using ATI - while this element of the story is in the realms of speculation, it has been suggested that Microsoft would be unable to emulate NVIDIA's GPU functions on the ATI hardware without risking a lawsuit from NVIDIA.
Given the disparaging remarks made by senior members of the Xbox team about the importance of backwards compatibility in consoles, it seems highly unlikely, then, that the next-generation system will include this feature - even regardless of the comments made to our source, which effectively rule out backwards compatibility entirely.
Much will probably depend, however, on the consumer backlash to the company's current unofficial stance on the feature. Microsoft has previously demonstrated a willingness to change its mind over even huge issues such as its controller design when faced with enough criticism from consumers. A strong backlash now against the lack of backward compatibility in current plans for Xbox 2 could make a significant difference to the console giant's thinking, much as the strong response from consumers and developers alike to plans to axe the hard drive has led to this issue being considered afresh, with a decision on the future of the component in Xenon yet to be reached.