I have been following with some interest the progress of the various teams of people hacking the PSP, to do a variety of things, from emulating other platforms to copying commercial releases onto playable memory sticks. Some of these hacks are perfectly legitimate in that they are not encouraging piracy but actually expanding the versatility of the device and allowing its full potential to be used in ways unrealised by Sony.
All this effort would not have been required if Sony had not put in place so many systems to try to prevent piracy. From developing heir own unique storage format the UMD which they control all the authoring tools, to not allowing unsigned code to run etc etc. I am very curious to know what it cost in engineering and investment to develop these protections, that are systematically being defeated. Does the cost start to approach the projected lost revenue for piracy? Perhaps, but the protections have been defeated and it certainly appears only a relatively short matter of time before most PSP games can be ripped to a memory stick and played without the UMD disc, distributed via the internet. It is quite possible that tens of millions of dollars in engineering and investment will have been defeated in a couple of months and actually leave people with a more functional device as a consequence. One that has greater appeal to end users as they can do more with it, and may in the end sell more units.
Each PSP could be somewhat cheaper and a substantially more flexible product without the unnecessary investment in digital rights management and content control.