Many Xbox hackers echo the findings of some analysts, who say Microsoft is getting what it deserves. Sony's PlayStation was also modified by hackers, but those efforts never became a rite of passage for hackers as they did ............
It seemed like a no-brainer for Microsoft: Use its massive software market share to win over game players to its Xbox console. It could sell a powerful, graphics-enhanced computer for about US$180 and sit back as the dollars rolled in from royalties paid by its partners for every Xbox game sold.
According to Microsoft's vision, the plan to practically give away its Xbox hardware would be offset by all the money it would make from selling software games. After all, who could resist picking up a Pentium III 733-MHz computer with full graphics and audio components for $1,000 less than a comparably equipped desktop computer?
That was the plan. What Microsoft didn't count on was the fervor of game fanatics intent on hacking its hardware to get a nearly free computer.
Dollars and Sense
Since it entered the game box competition about two years ago, Microsoft has been sandwiched between game-world favorite Sony's (NYSE: SNE) PlayStation 2 and Nintendo's GameCube . Analysts have said the Xbox platform simply isn't generating the level of software sales that Microsoft needs to become a winner at the cash register.
Xbox software is a very distant second to Sony, James Turley, principal analyst at Silicon Insider, told TechNewsWorld, adding that this is a bad sign for the company's continued success.
The popularity of game software is built on consumer buzz, and Xbox titles are selling, but they're not generating the revenue Microsoft wants them to generate, said Turley. Likewise, Laura DiDio, a Yankee Group senior analyst, told TechNewsWorld that although Xbox units are flying out the door, Microsoft isn't making any money on them.
Analysts blame Microsoft's royalty arrangements as one of the culprits in lackluster Xbox game software sales. You can't write programs for the Xbox -- it's illegal, said Turley. Game developers must sign a contract and pay a royalty to Microsoft for each game sold.