A plug-compatible machine is one that has been designed to be backwards compatible with a prior machine. In particular, a new computer system that is plug-compatible has not only the same connectors and protocol interfaces to peripherals, but also binary code compatibility—it runs the same software as the old system. A plug compatible manufacturer or PCM is a company that makes such products. The term may also be used to define replacement criteria for other components available from multiple sources. For example, a plug-compatible cooling fan may need to have not only the same physical size and shape, but also similar capability, run from the same voltage, use similar power, attach with a standard electrical connector, and have similar mounting arrangements. Some non-conforming units may be re-packaged or modified to meet plug-compatible requirements, as where an adapter plate is provided for mounting, or a different tool and instructions are supplied for installation, and these modifications would be reflected in the bill of materials for such components. Similar issues arise for computer system interfaces when competitors wish to offer an easy upgrade path. In general, plug-compatible systems are designed where industry or de facto standards have rigorously defined the environment, and there is a large installed population of machines that can benefit from third-party enhancements. Plug compatible does not mean identical replacement. However, nothing prevents a company from developing follow-on products that are backwards compatible with its own early products. One recurring theme in plug-compatible systems is the ability to be bug compatible as well. That is, if the forerunner system had software or interface problems, then the successor must have (or simulate) the same problems. Otherwise, the new system may generate unpredictable results, defeating the full compatibility objective. Thus, it is important for customers to understand the difference between a "bug" and a "feature", where the latter is defined as an intentional modification to the previous system (e.g., higher speed, lighter weight, smaller package, better operator controls, etc.).

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