Hackers use Xbox for more than gamesSEATTLE — Microsofts strategy of selling the Xbox, its video game console, at a loss has wrought an unforeseen consequence. Some users increasingly view the Xbox as a cheap appliance easily rigged to operate as a fully functioning personal computer. Forget zapping aliens. Thousands are souping up their Xboxes to house movies and music, serve up Web pages, even write software. All it takes is a few hundred dollars and free tip sheets on the Web. Microsofts news Wednesday that it is dropping the price of a new Xbox $20 to $180 could drive more users to give it a try. The software giant views the $100 or so it loses on each Xbox as the price of entry to compete against Sonys dominant PlayStation 2 gaming console. While it says it will attack hackers on a case-by-case basis, analysts say the company has so far tolerated the Xbox hacking as an unavoidable nuisance. "I dont think they see it as a major threat," says Jay Horwitz, game analyst at Jupiter Research. Not just for games In part, he says, that may be because the activities are relegated to the tech savvy, a small part of all Xbox users. Its also not a new problem. Shortly after Xbox hit stores in November 2001, hackers set to work cracking the technology intended to restrict the Xbox to playing Xbox games. But it does highlight the complexity of Microsofts struggles to make its products more secure. Because Xbox has so much capability, hackers have found it works well as: Media hubs Unlike a PC tower, the compact Xbox fits well next to the TV. By adding a start-up chip and a bigger hard drive, the Xbox morphs into an inexpensive media center for storing and playing a vast amount of games, movies and music. The TV screen serves as a monitor. XboxHacker.com, one of several Web sites packed with information on building Xbox media hubs, logs 8,000 visitors a week. "Its like putting custom parts on your car," says Webmaster Ken Robinson, a dockworker and amateur programmer in Federal Way, Wash. Linux PCs A group called the Xbox Linux Project advocates bypassing the Xboxs Windows operating system and replacing it with the free Linux operating system. This lets users run a wide variety of free software. More than 150,000 copies of Linux for the Xbox have been downloaded, says founder Michael Steil, a computer science student from Munich, Germany. Linux is continually improved by volunteer programmers worldwide, and Microsoft considers it to be one of its biggest competitive threats. Steil says Linux Xboxes are being increasingly used as Web-site servers and to write new Linux programs. Web tunnels Microsoft charges gamers $4 a month to use Xbox Live, its fledgling online gaming service. It hopes to add more subscribers and raise the fee. But GameSpy.com and XBConnect.com offer free "tunneling" software that lets Xbox gamers interact with each other online using unmodified Xboxes. GameSpy President Jonathan Epstein said it took technicians just two days after the Xbox went on sale to create the first Xbox Internet tunnel. "We did it to show were really cool technologists," Epstein says. While some Xbox hacking — copying games, for one — is illegal, tunneling, installing Linux and building media hubs fall into the gray area of what rights owners have to change a technology once theyve paid for it. Microsoft is pursuing several initiatives that could make it illegal to tamper with hardware embedded with certain security codes. In addition to saying itll stop illegal hacking, Microsoft also warns that opening the Xbox — required to install hardware — voids the warranty. "Were very committed to respecting the intellectual property rights of others, and we request the same respect for our innovations and those of our partners," says J. Allard, Xbox platform vice president. Fair use or foul play? However, hackers like Andrew "Bunnie" Huang, who is pursuing a doctorate in electrical engineering at Massachusetts Institute of Technology, say Microsofts attempt to "lock down" the Xboxs parts is a prelude to using similar techniques to keep PCs from running anything but Windows. Huang was one of the first hackers to crack the technology Microsoft embedded on the Xbox motherboard to stop people like him from running Linux code on the Xbox. While Microsoft says its taking such steps to make technology more secure for users, Microsofts critics say the company could also eventually use it to control more of the computer market. "This is about fair use of something I bought with my hard-earned money," Huang says. "If Microsoft can stop me from running whatever code I want on a given piece of hardware, it could then extend its software dominance into hardware and lock up the entire computer market."