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Of course an emulator *is* possible and MS is of course able to build an emulator for 360. The question is: how fast will it run? They won't release an emulator where you play 360 games with 12 fps... and it doesn't need to by cycle-accurate to eat up a lot of performance... Also keep in mind that only 6 cores are available to devs currently. With HLE MS could of course gain a lot of performance back but it won't be enough to make a general 360 emulator. Perhaps after profiling they can build special emulators for selected games...