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Xbox Hackers, Linux, the DMCA, And Modchips
HardcoreGamer writes "The New York Times has a long article on Xbox hacking, why Microsoft hates it, and who does it (Google). 'Xbox hackers are exploiting Microsoft's business model, which is to sell Xbox hardware at a loss...' but Microsoft doesn't make the money back on software -- as it planned to -- if you decide to load up Xbox Linux. Where else can you get a PIII-733 with graphics and audio for $180? The reporter talked to the IDSA; Andrew Huang, author of 'Hacking the Xbox: An Introduction to Reverse Engineering'; a Manhattan exec who hacked his Xbox and said 'The reality is that if you could bypass Microsoft's operating system you would end up with a fairly powerful computer for less than $200;' and others. The article discusses the DMCA, modchips, the Xbox Linux Project and lots more. A good -- if long -- read. A shorter version of the story is at the International Herald Tribune. Best quote? 'Microsoft is a company passionate about innovation and creativity. We are also very committed to respect for others' intellectual property and we request the same respect applied to our innovations.'"
Here
The EFF's Fred von Lohmann made an interesting point in the article:
While I certainly believe in the right to tinker with an Xbox you paid for and use by yourself, I see a shady area when it comes to interaction with other (unmodified) Xboxes - like on Xbox Live. I'm talking about cheating here, but I think the same can be applied to use of compromised software in an online environment.
Online PC games have been plagued by cheating players since day one, because of the ease with which their client software can be modified. Xbox Live does not have this problem yet (so far cheaters have been exploiting existing flaws in Xbox games), but I fear this will not last for much longer if easy, modchip-less Xbox hacks become commonplace.
Which brings me to my point: just how far should your right to tinker extend? What if it interferes with my enjoyment of the product? Especially since I paid for the product too, and I'm using it for its intended purposes while you're not?
This is one of the main concerns of many Xbox Live users like myself, and I haven't seen this issue addressed properly by either the media or the Xbox hackers. Can anyone enlighten me? How do Xbox hackers feel about this matter? Are they taking it into consideration?
Hee-hee. Dying tickles!
Four USB ports. The Xbox controllers are USB devices, just with a different connector. The Xbox-Linux people sell usb-Xbox convertors.
Ex-squeeze me ? It's an nForce motherboard with a builtin GeForce 3 type card (Geforce 3 + a bit extra). So yeah you can't upgrade it to the latest card, but it's more powerful for graphics than 80% of the PCs in use for games today.
I believe the standard nVidia linux drivers just work on the XBox.
"Free software as in beer, copy protection as in racket" - Telsa Gwynne
It comes from two sources. Firstly, standard practice in the console biz is to start selling the thing at a loss, with the expectation that you can optimise the production pipeline, so that you can make a profit on the boxes sold later. That's actually quite a specific price bracket, and is chosen to reduce the cost of entry, maximising profit from the system in totality (including game royalties). In effect, the hardware is being subsdised from the game royalties. Note that Sony started like that for both the PS1 and PS2, and now makes a small profit (I think it's around £20 a box) on the PS2.
Second piece: The original market price of the Xbox, claims that they were not going to drop the price, and then the round of price cuts. That's circumstansial, but if they were not selling the boxes at a loss [0] after those steep cuts, I'll be very surprised.
Interesting economics point: How many games does the average console owner have, per console? I'll take a stab at 4. Therefore, the correct thing to look at, from a business point of view, is not the profit per console - but the profit from console + 5 games. Me, I'd price the box so that the initial loss on the hardware is around the profit on 4 games [1]. Keep the initial cost's low, more adoption, and leach the money out of the customer base over time.
Now, that's all well and good, but none of that says how much profit is made on each box right now , only what they would have done at launch (loss), and near the end of the xbox lifetime (profit).
I'm going to accept that after the price dropped to 200, they were making a loss per box. They seemed quite forced into it, mainly by Sony, who had probably already improved the manufacture of PS2's, so they were not worried by the price cut.
Do they make a loss now?
Let me evade that for a moment, and discuss the development costs of the console. Aught they to be included in the 'cost' per unit sold? From a strictly business point of view - yes. You need to make back that money, before any profit is generated. From the 'does the manufacturer lose money on this sale' point of view - no. You can make the dev costs back from other sales. This complicates the whole question.
Note that this is based on economic arguemnts, and this sort of anaylsis will applie to any sales model that has a buy in cost that is greater than the per unit cost (printers, razor blades etc).
Let me link to a few facts: BBC: Microst loose $177 million. Note that that's from September last year, and is for 3 months preceding, off revenue of $1.28 billion
Q4 2002 (CNET) made a $348 million loss for the division.
Next quarter (Q1 2003) at CNET, and it's $190 million loss.
And it's too early for Q2 2003 data (rember that we need by divisional break downs, not overall profits for this).
So, they're definitly making a loss somewhere in their buisness, within the division that handles the Xbox. Is that on the xbox itself, or something else? [2]
No one can answear that. Apparently Mircosoft have confirmend that they make a loss on the hardware.
I'll take a different take to the linked article. The initial launch price was $300. Assume microsoft get $7 per game (average of the 5-10 range), and that would put the manufacturing costs at $330, or so; consistant with the analysts estimates in the above link.
They were forced to drop the price to $200 before they wanted to - I think that's clear. So suddently they were makeing over $100 loss per system. How much had they managed to reduce costs by? The above link trys to assert that they drop in lines with Moores law - that's crap [3]. My guess is that the cost is sliding down into the $220 to 250 range, based off the fact the M
Because the printer manufacturer puts a chip in the cartridge that makes sure you can only use the manufacturer's ink, and then invokes the DMCA when a generic manufacturer attempts to circumvent that "feature." Pay attention.
Generic cartridges are quickly becoming a thing of the past.
hang brain.
I would like to point out that the above post provides incomplete information. Console companies have done this for a long time, but all it has done is run their profits into the ground.
"Lies!" you say? well its not. Take exhibit A: the case of Sega Saturn vs Playstation. While Sega was trying to make the "Ultimate 2D machine," Sony was flexing its CE muscles and spending millions on researching how to manufacture their own chips cheaply and quickly for the playstation.
When they both were released the Saturn retailed for $399 and the playstation at (drum roll please) $299. Sega attempted to get in on the market by selling their product at a loss and match the $299 tag on the PSone. Sony on the other hand was _making_ money on the console because it had spent its time and effort on mass producing its own components. The Saturn, as we all know, was a business failure.
The same goes for the DreamCast and N64 which were both also sold at a loss. Time will tell on the XBox and GC. I think Nintendo might have learned their lesson and will tred more carefully, but MS... well, let's just say that the odds of the XBox making them money is quite low.
Sony is not selling the PS2 at a loss either, keep that in mind...
By the way the above can be read about in more detail on this site. It's more entertainning there anyway.
100% Crunchier
Wiley Technology Publishing -- which often works with Microsoft to publish guides for Microsoft products, like the Xbox -- agreed to publish Huang's book then backed out, citing DMCA concerns, but says they would not ask Huang to return the advance they paid him.
Unable to find another publisher, Huang self-published and began selling copies out of his garage. The Electronic Frontier Foundation then stepped in and helped Huang find a new publisher.
There's more in the article, including some discussion about the chilling effect recent legislation has on intellectual freedom.