The core security system has not been broken. However, it is reported that the authentication protocol between the optical disc drive and the console may be attacked, which if accurate could allow people to play illegally copied games.  Our security team is aware of this and we are investigating potential solutions to this issue. The Xbox 360 platform was designed to be updated, and we are prepared to respond appropriately should any unauthorized activity be identified.

Everyone should keep in mind that Microsoft invests a great deal of time and effort to ensure that Xbox gamers enjoy the most powerful and exhilarating game experience available today. Genuine and unmodified Microsoft Xbox products provide gamers with the reliability, security, support and dynamic gaming experience that they expect.  Microsoft works with a large group of legitimate business partners to sell and service genuine Microsoft Xbox products. Microsoft does not authorize or support any products or companies that modify or change the Xbox console in any way.  

It's clear that Porcaro believes the hacks so far can be corrected with online updates via the XBOX's internet connection. Several weeks ago Microsoft initiated the first XBOX 360 online update.  Currently, as stated by many XBOX hacking groups, if the DVD-ROM firmware is modified, the system can run burned 1:1 copies of game titles.  Microsoft insiders tell DailyTech that the most logical way to counter this hack will be to simply checksum the firmware before trusting it, although there are certainly more robust methods of trust in the works as well.