For almost a year and a half, hackers have been working to undermine the hardware and software protection on Microsoft's Xbox video game console so that they can load Linux software on the box and turn it into the world's cheapest Linux workstation. Recently, these hackers allegedly succeeded and contacted Microsoft to ask the company to open up the Xbox and release a "signed" boot loader that would let Linux enthusiasts legally load the open-source OS on the Xbox. Microsoft refused--or at least remained silent--so the hackers announced their success to the world.

The results weren't immediately clear. The hackers who created Free-X, as they call their Linux-on-Xbox software, say that opening up the Xbox could lead to more Xbox sales. But like other video game makers such as Sony and Nintendo, Microsoft loses money on every Xbox, opting to win big on software sales instead. The Free-X folks argue that legitimizing their product would lead to less Xbox piracy, which could lead to an expanded market for pirated Xbox titles. By providing the Free-X community with a signed boot loader, Microsoft could have eased fears among third-party developers that the system was compromised.

However, I suspect that Microsoft has larger concerns. Supporting Free-X could be construed as supporting Linux, and a top priority at Microsoft these days is to thwart Linux growth. Furthermore, Linux on the Xbox would dilute the Xbox market, which is already struggling against the market-leading Sony PlayStation 2. Currently, Microsoft can claim that Xbox owners purchase a certain number of software titles per console, which gives third-party developers a good idea of the potential market. If people started buying the Xbox as a low-cost PC, the games-per-console ratio would drop, making the Xbox a losing proposition for developers--the kiss of death for any platform.

Since the Free-X community released details of its hack, the situation with Microsoft has deteriorated, and the company is now threatening legal action--probably the only viable course of action open to Microsoft and one it must take to protect the companies that have chosen to back the Xbox. Still, did it have to be this way? Is this an example of corporate karma getting in the way of a good decision?