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Microsoft appears to be working to add physics support inside of its DirectX application interface, according to a job posting by the software giant. Microsoft is currently advertising for a software design engineer to join Microsoft's "Direct Physics" team, "responsible for delivering a great leap forwards in the way game developers think about integrating Physics into their engines," according to the posting.
Physics simulation, according to Microsoft, "is a key part of the next generation gaming experience, bringing increased realism, greater immersion and more interesting experiences."
Two independent physics SDKs are currently competing for developers: a solution from Havok, which has won hardware support from ATI and Nvidia, as well as Ageia, whose PhysX chip directly accelerates games.
I wish they had started this earlier. It would have been nice to see preliminry support for a Physics engine for the 360 and for DX10.