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The Xbox: Brilliance Or Blunder? 3 July 2002 Edition
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The Xbox games console is a bold step on the part of Microsoft and a device that could ultimately have significant impact on the company's future.

It is pretty obvious that Microsoft plans to eventually morph the Xbox into a full-featured home entertainment and digital rights management system that will likely interface to your TV, stereo and maybe even your PC.

If you stop and think about it, this is a good strategy.

In this digital age, piracy is a big problem for music and movie publishers, particularly given that the growing availability of broadband makes it easy to exchange copyrighted multimedia content with people who might live half a world away.

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For several years now, Microsoft has been positioning itself to become the universal guardian of digital audio and video and the changes to its EULA (as reported in yesterday's Aardvark) are just a further step towards this end.

The Wall Street Journal has just published a story about the next generation of Xbox codenamed "Freon" (see links section below). This version of the games console will add a TiVo-like capability that could see it replace the good old VCR.

Unless I'm very much mistaken, the Freon (or its successor) will also include the functionality of a digital TV set-top-box (like the Pace/Zenith/Motorola boxes that are used by Sky for their digital TV service).

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    Once we get to this stage, Billy-G ends up with an incredible amount of power.

    Suddenly TV broadcasters will have the power (through an Xbox) to control what programs you're able to record and how long those recordings are valid for. They can also offer to sell you video or music that the Xbox will burn to CD in a proprietary "rights managed" format. This video/music will be beamed direct to your Xbox through the same satellite and dish that presently delivers your digital TV service.

    This means that, more often than not, you will have to pay for the right to record a movie or feature showing on TV. Such TV systems will have no analog outputs so even your old VCR won't be of any use.

    If *anyone* wants to sell music or video in digital format, Microsoft will be the only place they can turn - because Microsoft will have an Xbox in (almost) every home -- just as they currently have Windows on (almost) every PC.

    However, Billy's plan may contain a flaw.

    In order to get the level of Xbox ownership up to critical mass, Microsoft are currently selling their hardware at a significant loss. It costs them quite a bit more to make an Xbox than they make from its sale. This is quite a common strategy in the games console marketplace. What companies lose on the hardware they make up for by requiring all software vendors to pay stiff licensing fees to release compatible software titles.

    However, all over the world there are talented amateurs (and probably more than a few professionals) who are trying to crack the various schemes built into the Xbox to prevent it running unapproved 3rd-party software such as Linux. Indeed, one anonymous sponsor is offering US$200,000 to anyone who perform this magnificent feat.

    If someone can crack the code, this would allow them to release new titles for the Xbox without having to pay Microsoft one solitary cent. What's more, the right software could convert the Xbox into a far more useful computing device than it currently is.

    Imagine what this would do to Microsoft's bottom line.

    Suddenly, people would be buying these boxes in huge numbers but opting to use cheap or free software instead of officially licensed programs from which Microsoft plans to earn its profits -- owch!

    The race is on -- have the hackers found Microsoft's archilles heel?

    That Kiwi Tivo-like Box
    I'd all but given up on the idea of building a Tivo-like box from off the shelf hardware and software but fortunately a sponsor has put up their hand and said they'll provide the bits.

    As soon as the boxes arrive I'll start documenting the project and its performance.

    And for those who have forgotten what it's all about -- it's a Personal Digital Media Centre (PDMC) that will provide: a DVD, VCD, SVCD, CD player, a digital video recorder, an MP3 player, a Net (streaming) radio, a games console, a CD, VCD, SVCD burner, an optional UHF SkyTV decoder (for those who want to download and use the freeware to do this), and more -- all in one regular PC box.

    The plan is to tie all this functionality together under Windows and Linux with freeware and maybe some custom-written code.

    Once the project is done, I'm sure the sponsor will be happy to make a similarly configured box available to anyone who wants to buy one. Who needs a next-generation Xbox eh?

    Stay tuned for updates.

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