Backward compatibility is important because it eliminates the need to start over when you upgrade to a newer product. A backward-compatible word processor, for instance, allows you to edit documents created with a previous version of the program. In general, manufacturers try to keep all their products backward compatible. Sometimes, however, it is necessary to sacrifice backward compatibility to take advantage of a new technology.

The flip side of backward compatibility is upward compatibility. Upward compatible is the same as backward compatible, except that it is from the point of view of the older model.

Another term for backward compatible is downward compatible.