Xbox Evolved clams Microsoft is testing the waters for a "forward-compatibility" feature for the next-generation Xbox 360 console. This feature will supposedly improve the graphics and gameplay of Xbox 360 games on the next Xbox console:
This is something completely different however. Forward-compatibility means that games made for the Xbox 360 are made even better thanks to the features and hardware of the next Xbox system. This isn’t a side effect of textures being cleaner and upscaled resolution, this is a new animal completely. Imagine playing Gears of War 3 on your Xbox 360 it looks and plays good right? Well imagine that the year after it comes out you go out to buy the next Xbox and it looks even better, it plays even better. Features in the new controller are utilized with the game, the graphics do not only look sharper, but the draw distance is better, the speed is better, framerate, and there are even new features, perhaps even levels via DLC for the game on the third-generation Xbox. GoW3 is of course an example of what this could mean, past the forward-compatibility information, Xbox Evolved has not been given any other information about the next generation of Xbox.
Our sources indicate that Microsoft is in a stage of “testing the waters” before they nail down the final specs of the new machine. Introducing these options early on to developers means that the games they make for the Xbox 360 will have no life on the next platform, and allow them to begin much earlier in figuring out how the next Xbox works.