A surprising report has emerged from Japan's Ultra One monthly technology magazine. The magazine's July issue reports that Sony will be achieving backwards compatibility on the PlayStation 3 not through software emulation, as previously announced, but through physical hardware.

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The magazine states that the PS3 hardware, in its current form, includes the core PlayStation 2 chipset. This presumably means that initial PS3 units will include the single Emotion Engine (the PS2 CPU) and Graphic Synthesizer (the PS2 graphics chip) combo chip that powers the slim model PS2.Of course, including the extra hardware drives up costs. The magazine adds that Sony plans on removing the PS2 chipset from future revisions of the PS3 hardware once it has finished development of a proper software-based PS2 emulator. Such a removal would help bring down costs for the system.Sony has repeatedly stated that PS2 software would run on the PS3 through software emulation, leaving many to believe that the company had developed a powerful emulator for the older hardware. This would have been a particularly impressive feat, considering that even the PlayStation 2 originally used a combination of hardware and software to maintain backwards compatibility with original generation PlayStation games.If the Ultra One report is true, the use of hardware emulation casts some doubts on what kind of visual updates we can expect for PlayStation 2 games. PlayStation 1 games saw a few marginal upgrades when running on the PlayStation 2 due to the PlayStation graphics chip being emulated entirely through software running on the PS2's Graphics Synthesizer.On the other hand, hardware emulation pretty much guarantees that every game that runs on the current PS2 will do so on the PS3.A few other revelations appear in the Ultra One report, an investigative story into the reasons for the PS3's high price point. Izumi Kawanishi, head of Sony's Software Platform Development Division, commented to the magazine that one difference between the PS2 and the PS3 is that the PS3, as it was announced, is "nothing more than just the basic system." Sony is considering releasing models with larger volume hard disks and upgraded network features in the future. However, Kawanishi noted, Sony won't be changing CPU clock speed or memory amounts, as all PS3s have to run the same games.The PS3 comes equipped with, in addition to a default hard disk, a "large amount of flash memory," the magazine reveals. This is used to house the operating system and all future system updates. Based on the wording in the magazine, it seems that the hard disk is to be used exclusively for multimedia content and will not contain any system features; users will, after all, be able to swap the built in hard drive out with any standard drive they pick up at a computer hardware store.The magazine also provides an assurance about the PS3's compatibility with its own games. The PS2 lost compatibility with older titles as new models were released featuring updated chip designs. This won't be a problem with the PS3, as the magazine reveals that in the event that problems are discovered following an updated chip design, the system will be able to connect Online to download any required patches, which will then be stored on the hard disk.Finally, the magazine gives a solid price estimate for the high-end PS3 model in Japan. Sony officially lists the price as "open," meaning retailers will have to determine their own pricing, but Ultra One says that the price is "expected" to be 73,000 yen.Who exactly is expecting this price is anyone's guess, as the magazine doesn't give specifics. We'll wait for official word from Sony on that price point, and on the other details in the Ultra One article, before considering this report confirmed.