While taking their own words back is stupid, why not open-source the platform? They're selling kinect with positive margin and with open platform they will do even more.
Because then Sony and Nintendo could simply make their own hardware and use the drivers with it. The most interesting bits of Kinect aren't in the hardware... they're in the software, and Microsoft spent tens of millions of dollars and quite a few years developing it.
They don't need to open their analysis, they just need to open the interface for the device itself -- the work the community has already partially done. It'll happen eventually anyway (soon, most likely), so it has a minimal downside for them.
