It will only be compatible with the prior system's top-selling games, said Microsoft's Vice President Peter Moore. Microsoft will pick and choose only the most popular Xbox titles from its backlist of games and will use emulator software for those titles.
Exactly how many titles remains to be seen. If it's only a few, then it isn't really backward compatible at all. If it's around half the Xbox catalogue the only way a regular user would know for sure is to try the game.
More news as it comes.

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