Source: A News.com story from late last week.
What we heard: According to the News.com story, Microsoft designed the Xbox 360's compatibility with the phenomenally successful portable music player without the support or consent of the gadget's maker, Apple. Xbox digital-entertainment executive producer Jeff Henshaw is quoted in the article as saying that Microsoft approached Apple to make the two pieces of geek kit officially compatible, but Apple balked. "So we went in and built all of the support we could," Henshaw then said.
That limited support means that music ripped to an iPod off of a user's own CD will be 360-compatible, but songs purchased through Apple's iTunes software will not work on a 360 due to the software's antipiracy measures. But because the Xbox 360 isn't officially compatible with the iPod, what compatibility remains could potentially be removed with an iPod firmware update if Apple so chooses.
On the one hand, it seems petty to cut out the limited Xbox 360 compatibility that lets users move only music burned from their own CDs to the Xbox 360 (using the iPod essentially as a handy way to get it from point A to point B) when Apple doesn't have a direct stake in the console wars. On the other hand, seeing as how the company recently started charging royalties to companies who make accessories that use the iPod's dock connector, it would make sense to send the message that unofficial iPod compatibility is frowned upon, and can be undermined with a simple software update.
Apple has also shown willingness in the past to protect its golden goose from the perceived scourge of unofficial compatibility. When RealNetworks started selling (unofficial) iPod-compatible digital music through its Rhapsody online music store last year, Apple updated its software to break that compatibility. RealNetworks later circumvented that and once again offers iPod-compatible downloads. Whether Apple couldn't figure out a way to once again lock out Rhapsody-downloaded songs without affecting the rest of a user's music, or if it just didn't feel like spending resources going back and forth with RealNetworks breaking and unbreaking the compatibility is anyone's guess.
We could see Apple doggedly trying to protect its control over all things iPod, but as RealNetworks and hackers around the world have shown, software security measures are made to be circumvented. If Microsoft is serious about making the 360 iPod-compatible, we're guessing they create workarounds for whatever protection schemes Apple can cook up. In the end, it's probably not worth the hassle or the resources for Apple to try and break the 360's compatibility when Microsoft only uses it as a selling point for the machine, and not an actual source of revenue.
If RealNetworks can get away with unofficially supporting Apple's iPod on songs it's selling for a profit, Microsoft can likely do the same to keep what is at best a nice feature of its new machine, but not something that's going to drive sales. Besides, Microsoft touting iPod compatibility is just free advertising for Apple, and doesn't exactly reflect that well on the numerous Microsoft-compatible rival MP3 players.
Bogus or not bogus?: We'll go out on a limb and say bogus, but Apple's not exactly the most predictable company around.