Bearded, clad in a hoodie, and with a mouthful of swear words, hacker Kyle Machulis took the stage last month at San Francisco music joint Rickshaw Stop. He was there to deliver a Nerd Nite talk about his latest love: Microsoft's (MSFT) Kinect, a gesture-and-voice-recognition accessory for the Xbox gaming console that lets people play video games without having to hold a controller. "This thing costs $150 and is sold at GameStop," Machulis told the crowd. "Oh, s—t! We live in the future!"
Machulis serves as one of the leaders of the Open Kinect project, an ad hoc effort backed by thousands of hackers and DIY enthusiasts. They've cracked open and studied Microsoft's latest device and are now putting it to unexpected new uses, ranging from commanding robots with hand motions to performing sex acts on avatars.
The intense interest that Kinect has drummed up in geekdom presents Microsoft with an unfamiliar opportunity. At a time when Apple (AAPL), Google (GOOG), and other tech giants are vying to reach independent developers who make the ingenious software apps that have reshaped the market for things like smartphones and tablets, Microsoft has stumbled onto a direct path to them. Experts say that if Microsoft can focus the energy of that horde, the company may be able to leverage Kinect's early success and dominate the next era of human-computer interactions, in which PCs, phones, and other electronics can be controlled by body movements and voice commands instead of keyboards and mice. "Microsoft has succeeded despite themselves in creating something really cool," says Matt Asay, a prominent open-source blogger and executive at software startup Strobe. Yet a number of critics say the relationship between Microsoft and Kinect-loving geeks is already strained, and that Microsoft's early reactions to their playful tinkering suggest it could squander a once-in-a-generation opportunity. "Here was a chance to throw themselves deep into the bowels of the open-source hippy movement," Asay says. "They are kind of trying to do it, but they don't want to touch anyone in the mosh pit."
Kinect has provided Microsoft with a long-awaited consumer-electronics hit. Chief Executive Officer Steve Ballmer, speaking at the Consumer Electronics Show earlier this month, revealed that Microsoft has sold 8 million of the devices since their launch in November. Kinect has extended interest in the Xbox beyond gamers to entire families and has helped Microsoft add 5 million subscribers to Xbox Live, its online home entertainment service, since November. That's a 20 percent increase. Hundreds of millions in marketing dollars helped make Kinect the unquestioned champion of the holiday season.
The Open Kinect project was also an immediate success—albeit one without Microsoft's blessing. When Kinect appeared on store shelves, Adafruit Industries, an online seller of DIY electronics kits, offered $1,000, then $3,000, to the first person who could analyze Kinect's innards and share the information with developers at large. It took all of six days before the Kinect's secrets were cracked. "That's when things exploded," says Machulis.
Geeks around the world set to work. One strapped a Kinect to a Roomba, letting him steer the robot vacuum cleaner by waving his hand. Others used Kinect to control World Of Warcraft characters with their bodies rather than keyboards. A pair of developers projected virtual puppets onto a wall and manipulated them with hand gestures. And inevitably, there's the porn: thriXXX, a maker of 3D interactive sex games, announced a PC game that will let players massage, whip, and otherwise interact with virtual paramours.
Microsoft responded to Open Kinect as one might expect of a company long suspicious of hacking. In statements, Microsoft said it "does not condone the modification of its products" and vowed to work with law enforcement "to keep Kinect tamper-resistant." After geek outrage spilled onto the Web, Microsoft spent the next day clarifying its position. It stressed that it objected to miscreants who might, say, use Kinect's camera to peer into living rooms. It would not, however, sue well-intentioned tinkerers. After that peace gesture, Microsoft stopped discussing Open Kinect publicly. (The company declined to comment for this story beyond reiterating enthusiasm for Kinect.)
Sam Ramji, a former Microsoft executive who led its open-source strategy, credits the company for saying it wouldn't sue the hackers. Still, Ramji says Microsoft should go further and actively support them, just as Apple found a way to channel developers' interest in the iPhone into the highly successful App Store. "Companies should make it easy for people to hack," says Karim Lakhani, an assistant professor at Harvard Business School who studies open-source projects. "Why wouldn't you want people going crazy with your products?"
Dan Barry, a former astronaut who is using a hacked Kinect to solve thorny robotics challenges—such as getting a bot to tell the difference between a picture of a person and an actual person—says Microsoft "really missed the boat" by distancing itself from Kinect enthusiasts. "They brought out this amazing sensor and just focused on the Xbox." The Kinect has won over robotics experts in particular, he says, because it's crammed with technology that would otherwise be difficult to replicate or expensive to buy. With its cameras and depth-perception software, the Kinect is a viable replacement for the $5,000 laser range finders typically used to guide robots, Barry says.
Microsoft shows no sign of exploiting that edge, which is ironic given that the company has also invested heavily in robotics software. And it has allowed other companies to elbow in. Willow Garage, a robotics startup in Silicon Valley, is offering $8,000 in prizes for Kinect apps. PrimeSense, the Israeli company that makes Kinect hardware, has rushed out a developer version of its product.
If Microsoft remains ambivalent, it risks losing its position at the eye of this storm of innovation. "Right now everyone is positioning themselves to get a piece of the action," Machulis says. Microsoft has "not really been jumping out and helping us. They just haven't been doing anything to stop us."
The bottom line: Microsoft's Kinect, a consumer hit, presents a rare chance for the company to harness the enthusiasm of hackers.