Microsoft and NVIDIA reportedly inked a licensing agreement under which the software giant receives license on certain technologies that allow the firm’s forthcoming Xbox 360 game console to play games developed for the original Xbox, which uses NVIDIA graphics core.

“Microsoft and Nvidia currently have a license agreement for Nvidia-related technologies for use in the Xbox 360 in order to achieve backwards compatibility with Xbox,” web-site 1UP wrote in a news-story.

According to the agreement, Microsoft will make payments to NVIDIA over several years. Terms of the contract are not disclosed, but the Santa Clara, California-based graphics chip designer reportedly confirmed the existence of such an agreement.

In order to play Xbox games on Xbox 360 console Microsoft will need to emulate technologies found in its first gaming machine. Particularly, the Redmond, Washington-based software giant will have to imitate an Intel x86 processor on the custom IBM PowerPC chip and also mimic NVIDIA graphics processor somehow. While the first task is reportedly not a complex one, the second is associated with emulation of specific hardware peculiarities and requires an agreement with NVIDIA.

“Emulating the CPU [of the original Xbox] isn’t really a difficult task. They have three 3GHz cores, so emulating one 733MHz chip is pretty easy. The real bottlenecks in the emulation are GPU calls - calls made specifically by games to the Nvidia hardware in a certain way,” ATI European Developer Relations Manager Richard Huddy said in an interview with Bit-Tech web-site recently.

Microsoft Xbox 360 console is based around microprocessor developed by IBM, high-definition visual processing unit designed by ATI Technologies, I/O controller engineered by SiS and some other key components. The gaming machine will feature wireless network connectivity and will provide a broad set of multimedia capabilities, it is projected.