Given the performance gap (16 times more RAM, etc) I suppose software emulation was an option, a bit like rosetta.

The first version of PS3 had an hardware support for PS2 but following versions had software emulation: http://en.wikipedia.org/wiki/PlayStation_3_models#Model_comp...

Actually, the later versions of the PS3 that don't include hardware compatibility with PS2 titles have no compatibility with PS2 titles at all. The only software compatibility layer is for PS1 titles, which are sufficiently simple enough to emulate in software.

The biggest reason that software emulation won't work for 360 titles is that the hardware architecture of the new consoles is completely different from the older generation. The CPU instruction set is x86 instead of PowerPC-based, and the entire memory and GPU interaction system is different than the 360. To emulate the entire instruction set of everything in software is just not going to be possible.

> The only software compatibility layer is for PS1 titles

THere was a partial software emulation for european PS3s as stated by wikipedia.

> the hardware architecture of the new consoles is completely different from the older generation

I knew for the PowerPC vs x86 this is what I mentioned rosetta. For the GPU I thought they were both using DirectX.