Yes, the original 60GB PS3 had extra hardware/software for backwards compatibility with PS2 games. This was removed when the cheaper 40GB version was released, and for all versions that have followed.

It is a real shame that the PS3 now doesn't have any backwards compatibility with PS2 or PS1 games. However I'm hopeful that in a future firmware update, or another hardware revision in the future that this will be added back in, but I'm doubtfully.

You can still buy slim PS2's though for not much money so do you really need a PS3 to be backwardly compatible? It is debatable, however it is also nice to have a single console for all three and not need to keep them all connected up all of the time.

I do think that the original 60GB PS3's are going to command more money than recent versions though due to this backwards compatibility.
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Common misconception, they never took out PS1 compatibility. All PS3 models still play PS1 games.
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Ah, I didn't know that. That is good to know. Do you know if the PS1 emulation software or hardware based?
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It's software based, always was on all models I think. It does do some upscaling and graphics smoothing, but in my opinion the smooth textures filter the PS2 employs was far better. So I'd recommend playing PS1 titles on a PS2 instead if you can. You won't have to go through the hassle of transferring your PS1 save files to and from the PS3 either, which requires a USB to PS1/PS2 memory card adapter thingamajig like one of these. The PS3 doesn't have the old memorycard slots you know, so the emulators use imagefiles of memorycards on the PS3's harddrive which can be assigned to virtual memorycard slots that the emulator uses.
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I liked the idea of using the memorycard imagefiles. Makes backing up save game files much easier, and also removes the need for real memory cards, which fill up far too quickly and cost too much in my view for another one. Share the PS2 compatibility was removed as it is a feature I would have used greatly.

Does anyone know if the Xbox compatibility still exists with the latest versions of the 360's dashboard? I remember it needed to have compatibility written for each Xbox game so only supported games it had directly had compatibility written for. But this feature hasn't been mentioned at all since the 360 launch.
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