I keep seeing people refer to SW backward compatibility coming to all PS3s later this year.  As far as I knew, this was just fan-driven rumor and that software emulation wasn't going to happen without a couple of key chips the 40 gig lacks.  Can someone point me to an article or other piece of information regarding this topic?

How does computers emulate Ps1, Ps2, NES, SNES, Genisis, ect ect consoles without having their hardware? thats the point for people saying SW emulation is possible,

^^ software emulation is possible, just because of the hardware of the PS2 and PS3, it is tough to emulate the PS2 on the PS3. PC's have a different architecture, so the way they overcame the difficulties of emulating a PS2 will not work on a PS3.

As for if they will ever manage it, who knows, but I am starting to believe that it will not be coming out at all.

EDIT: so currently, this is all fan driven rumors, based on that it is possible, and some guy at some store said 40GB will be packwards compatible. 

Personally, I doubt it ...

A long time ago I was looking into writing an emulator and at that time the general consensus was that it took between 8 and 12 times the processing power to do proper emulation in software without doing instruction translation; and instruction translation is far buggier and has massive compatibility issues. Now, unlike the XBox (which had a hardware abstraction layer for the GPU), the PS2 hardware was quite regularly directly accessed from code which means that you need a high level of hardware compatibility for most programs to run well.

I suspect the Cell Processor is probably fast enough to emulate either the Emotion Engine or GPU from the PS2 without using SPEs but I suspect that it would require most/all of the SPEs to emulate both processors at the same time. In my opinion this would be a nightmare to develop because you're attempting to emulate a sequential system on a parallel system and you need nearly full processing power from the parallel system and a high level of compatibility in the final system to get most things to run well.

Is it possible? Probably, is it likely? not really ...

I haven't messed with PS1/PS2 emulation but the reason the older systems work perfectly fine is that modern computers can run dozens of laps around the original hardware so it can properly emulate it without a performance hit.  However the PS2 HW is still recent enough that to get SW emulation running decently is still pretty hard.  I'm assuming Sony wants to find a way to get a decent amount of titles working at playable framerates before releasing SW BC patches.

They will for sure have it at some point, I'm trying to imagine a company like Sony NOT reaping the benefits of 2 generations of almost complete software dominance, I just can't see it. The PS2's library is to big to not want to capitalize on. I'm sure theres a way and I'm sure Sony's finding it :P

So the PS3 is not such a leap in performance with the cell that PS3 fanboys claimed when it first came out?

A bigger question is wether or not Sony has enough motivation to create BC. Thats the real challenge.

I can't find the article I read on N4G but it was something along the lines of Sony releasing SW backward compatibility in Japan on the 40 gig with the next major firmware release. I find it extraordinarily hard to believe but apparently there are many that believe it is coming because I see posts all over the place about people referencing how SW backward compatibility this fall will be the ultimate win.

I suspect it is just a fanboy rumor and has no basis in reality but thought I'd ask none the less.