It appears that the as yet to be released Microsoft Xbox '720' - which seem to be launching on May 21st - will not be able to play discs from previous incarnations of the Xbox.The information comes via the respected Bloomberg service, which points out that,
like Sony's PS4, the Xbox 720 will also use use an Advanced Micro Devices Inc (AMD) Jaguar processors, "as it seeks to cut the cost of building machines and get developers to create more titles" and that this means no backwards compatibility.
Bloomberg has confirmed that, "The Xbox will use an AMD system-on-a-chip that combines powerful Jaguar central processing units with graphics chips, said one of the people, who sought anonymity because the plans aren’t public. The shift to the so-called x86 format ubiquitous in modern personal computers means Microsoft will drop the Power PC technology designed by International Business Machines Corp. (IBM), and game discs made for the current Xbox 360 won’t be compatible."
So, like most consoles since, well, a long time ago... no backwards compatibility. We will now bet a small sum that Microsoft will make older games available via some download service later in the life of the 720.