The first big roadblock to Windows Phone 7 modding has been found. According to Conflipper, a former Windows Mobile hacker, Windows Phone 7 devices ship with a "Genuine Software" checker which gives you the screen below if you try to access Xbox Live, Marketplace, Windows Live, or Zune from a device running an OS version that doesn't match up with your hardware key.
This grouchy screen isn't the only drawback to hacking a WP7 device. Mobile users who are found modifying their phones to run pirated games or fiddle with their Xbox Live achievements will get perma-banned from Xbox Live; much like the policy on modded Xbox consoles.
While these problems may not be an issue for some, others may shy away from running the risk of bricking their phones or losing their accounts over modding their phones. Well, at least until the circumventing solutions start popping up, which will probably be any day now that the gauntlet has been thrown down.