One of the companies making Xbox "mod chips"--add-on components that modify the game machine so it can run illegally copied discs and homemade software--has gone out of business, possibly because of legal pressure from Microsoft.

The information site for Enigmah-X, the second Xbox mod chip to go into commercial circulation, was replaced late Tuesday with a brief message: "After speaking to lawyers we feel that we must not do this project anymore. There are many other chips and methods for guys to play with anyway so have fun and good luck to everyone out there."

Enigmah and Microsoft representatives did not respond to repeated requests for comment. However, in May, shortly after the first Xbox mod chip went on sale, a Microsoft representative said the company was investigating legal avenues for shutting down such operations.

Schelley Olhava, gaming analyst for research firm IDC, said pirated games running on an altered Xbox are unlikely to have a significant effect on sales of legitimate games. Software and licensing revenue are critical for Microsoft to eventually make money off the heavily subsidized Xbox hardware.

"Sony has been dealing with mod chips for the PlayStation 2 for years," Olhava said. "They're probably losing some game sales, but I've never heard Sony raise that as a major concern."

Olhava said the complexity of installing mod chips makes them a niche phenomenon. Some of the chips require as many as 30 precise soldering connections to the game console's main circuit board.

"There are always going to be hobbyists who try to figure out things to do that the unit wasn't designed to do," Olhava said. "But the vast majority of people are just going to play games. They don't have the interest, the skills, the time to try and make it do tricks."

While mod chips allow illegally copied games to run on the Xbox, hackers say their interests fall on the right side of the law. Most hacker sites forbid distribution or discussion of illegally copied games, instead focusing on using mod chips to run homebrew software on the Xbox.

An early version of an Xbox media player is in circulation, as is a beta release of an Xbox version of MAME, a popular piece of "emulator" software that allows PCs and other systems to run old arcade games such as "Pac Man" and "Galaxian."

One other Xbox mod chip, the Xtender, is in wide circulation now, although several other groups are reportedly working on their own designs, including a German company working on a chip that supposedly would be much easier to install.