Microsoft’s Xbox Live team strongly suspects that a systematic denial-of-service attack is responsible for the crippled functionality and performance the network suffered over the past ten days, a source close to Microsoft has confirmed to Primotech.

The attack, carried out by one or more individuals, left a large percentage of Xbox Live’s 8 million subscribers with unstable online performance in popular Xbox 360 games like Halo 3 and Call of Duty 4. In addition, many common functions like voice chat, game invites, and even Marketplace browsing, were left severely impaired or completely non-functioning.

Xbox Live’s figurehead ‘Major Nelson’ responded to users’ concerns on his blog last Saturday, acknowledging that the service was suffering “a few issues,” without citing a specific source of the problems.

Many speculated that strong holiday software and console sales, coupled with the vacation time commonly enjoyed by much of Live’s user base, lead to an abnormally high number of simultaneous connections for prolonged periods, inevitably resulting in degraded network performance and functionality. While this may partially be responsible, the team internally believes a malicious attack to be the greater source of the problems.

It’s unclear at this time whether or not Microsoft plans on compensating subscribers for the downtime. See Update #1 below.

Currently, stability has seemed to return to much of the service, including the areas most affected, such as matchmaking and Marketplace browsing and downloading.

Primotech contacted Major Nelson for comment, but he was unable to reveal anything at this juncture. It is expected that Microsoft’s PR team will be releasing a statement soon, but it is unknown whether or not it will reveal anything regarding the attack. See Update #1 below.

While no individual or group has yet claimed responsibility for the attack, we here at Primotech have our own prime suspect.

Update #1 (11:30 PM EST)- As anticipated, Microsoft has released an official statement, courtesy of Live General Manager Marc Whitten. The team acknowledges again the poor performance during the holiday period and offers its apologies. Xbox Live Silver and Gold members will be compensated in the coming weeks with a free Xbox Live Arcade game.

Update #2 (1:00 PM EST Saturday 1/05)- Cem Aykan has posted a comment below containing a link to a page he set up that is now tracking Xbox Live’s uptime in real-time. Thanks for sharing, Cem!

Update #3 (9:00 PM EST Saturday 1/05)- Our source has presented us with a few new details. The attack was not specifically on Xbox Live itself, but instead on the entire Microsoft Passport/Live authentication system, which resulted in a cascade failure. Additionally, the service peaked with 800,000 users simultaneously connected over the holidays.

Update #4 (10:45 PM EST, Saturday 1/05)- It seems that three Texans, in a misguided attempt at justice, have filed a class-action lawsuit against Microsoft for the outages.

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