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CAL4M1TY said:
Well, I won't send you to hell for pirating, there'll be plenty of other people to do that. But I don't condone it either.

To answer your question, I have two reasons:
1) Xbox Live: The risk of playing a burnt game online (higher if it's a not even released game like that Gears 2 episode a few months back and Halo 3 before that) is that somehow MS can detect that you aren't playing on an official disc and give your xbox console a lifetime ban, meaning no xbox live ever for that console.

It's unlikely that many people would care about that, seeing as how we all went fine on the PS2 with 99% of games having no online content whatsoever.

2) This ones the more likely. RROD. As you are aware, console warranties are voided the second the case is opened and since alot of early 360 modding involved opening the case, only those brave enough pirated games, and the rest of us decided they wouldn't run the risk of having a completely warranty free console.

Even though I've heard that moddings advanced so that opening the case isn't required, I still suspect that the accepted opinion is that modding requires the case opened, case opened voids warranty, we all fear RRoD.

Also don't forget the PSP's been out for way longer, so modding would have been available whilst the 360 was still in R&D.

 

 1. Properly made backups cannot be detected by microsoft as long as you stay up to date with the hacked firmware that is released every 6 months or so.

2. Microsoft outsource repairs to various repair centres. These repair centres are not affiliated with Microsoft. They will repair your Xbox 360 regardless of warranty seal being damaged\removed. At least in Europe. How do I know this? Because I used to sell modded Xbox 360s (I've gone straight now). Since massive numbers of early Xbox 360s have gone RROD and I have sent at least 8-10 for repair.

All of which came back repaired with a brand new warranty seal on, after I had removed the damaged one before sending it in for repair.

There is ZERO motivation for people who intend to play copies who know what they are doing. Other than the moral one.

Which in my case I came to my sense a good year ago, but only a couple of months ago did I send my last Xbox 360 that had no warranty sticker in with successful results.

The problem here is that the repair centre is not affiliated with microsoft and they get paid for a repair. The staff at the service centre therefore have no motivation to not repair your console regardless of its condition.

 

To answer the OP though. It takes a good half an hour to modify an Xbox 360 and that is when you know what you're doing. For a 1st timer we're talking a good few days of looking through forums on how to do it, then a few hours to actually work out how to do it following the steps needed. You then need to read your drive key, patch that in the hacked firmware and other annoying steps. The programs you use are quite fiddly and not user friendly. Finally you need to have a compatible SATA card\chipset and be capable of oppening up your computer to plug in the Xbox 360 DVD-ROM drive etc.

It's a fair bit of hassle 1st time I'll tell you.

PSP = An hour to do your research, find a friend with an already hacked PSP and you'll be finished in 5 mins. All you need is a memory stick which everyone would have already and a spare battery, which you would have if you have a friend with a PSP. Or you can just buy a Datel Tool battery off the shelf. The process is very user friendly.

Also as others have said, many people just buy the PSP for its media features

Finally, there isn't that much good software on the PSP. (sorry PSP diehards, I own one myself and there's no denying there really isn't much going for it and even less looking into the future in terms of games).