Sources close to Microsoft's senior Xbox executives have confirmed that the company does not intend to make its next-generation console, which is set to be launched by late 2005, backwards compatible with existing Xbox software. Speculation about the backwards compatibility functionality has been rife since it emerged that Xbox 2 - codenamed Xenon - will have radically different hardware to the original system, with a non-x86 processor, no hard drive and an ATI, rather than NVIDIA, graphics chipset, all of which would make running Xbox titles on the platform very difficult.

It was widely believed, however, that Microsoft had retained a team of hardware emulation experts to work on the problem - although concerns over the viability of such an endeavour were voiced by some experts, especially regarding the company's ability to emulate the functions of the graphics unit in the Xbox without violating NVIDIA's intellectual property rights.

GamesIndustry.biz has now learned that Microsoft does not plan to provide any backwards compatibility in the next-generation Xenon platform - and indeed, that senior executives at the company don't believe backwards compatibility to be an important feature for consoles. According to a source close to the project, internal Microsoft figures suggest that only 10 per cent of PlayStation 2 purchasers were interested in the console's ability to play titles developed for the original PlayStation.