Jari Ketola
22 Jun 2004 15:18
According to an article published by Team Xbox (an IGN site) Microsoft has issued a statement that yesterday's rumors regarding Xbox 2 not being backwards compatible, were not true.
"Recent stories in the press about future Xbox products are nothing more than pulp fiction. Microsoft hasn’t made any announcements regarding the next generation, so it’s far too early to speculate about specifics, including backward compatibility. In fact, this media conjecture is irresponsible. The credibility of any publication willing to compromise fact in favor of a catchy headline must be questioned. Xbox fans are smart enough to distinguish truth from sensational reporting."
Now as you can see, Microsoft isn't saying that Xbox 2 will be backwards compatible. They are probably still trying to make up their mind on the matter. However using a different CPU platform might make it impractical to try and implement adequate backwards compatibility.
Source: Team Xbox