I'm certain that many of you have been waiting for us to say something about how backwards compatibility works on Xbox 360. It is a very complex topic, to say the least. Thanks to XboxFan, a member of the backwards compatibility development team here for providing a lot of these details.
Xbox is based on a Pentium III processor, while Xbox 360 is based on a custom triple-core PowerPC processor co-developed with IBM. This is but one of many differences between the platforms, but one people are familiar with. Digging deeper, you would find that nearly everything has changed. Graphics, audio, networking, etc. have all been replaced with different subsystems.
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