While that's a "rumor" page, the controller thing has been pretty much confirmed, and the backwards compatiblity feature looks almost certain...that is, if you have the optional hard drive. Still, this puts me a little more firmly behind the 360, regardless of the stupid name. Lack of XBox compatibility was a sticking point for me.
I love the fact that the controllers will work with a PC, though. As long as the controllers are fairly well designed, it means I can finally retire my 7-year-old Sidewinder pad.
Now Sony's pretty much got to make PlayStation 3 backward-compatible, or risk some PS2 players moving over to the X-Box side. Particularly since a lot of the old PS2s are ceasing to work properly.
On the other hand, with the recent news that the Blu-Ray and HD-DVD camps are trying to settle on a compromise, that can't help but be good news for those looking forward to the PS3.
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If you can return it to the store, do so. Never troubleshoot bad hardware during the return period Ok, so do some BASIC troubleshooting, but not much more than that. Does it work if you unplug everything from the Xbox but one controller?