I think the idea is leverage form factor, usability, and familiarity. Those things + security upgrades would be a cheaper and effective rollout.

yes cheaper [et.al.], also durable as many gamers that go salty and rage after in game death would attest. and the speed of reflashing a PIC modded device in the hands of even a novice picasm programmer is an interesting angle for field expedient repair/mods.

The $30 xbox controller will interface to the submarine via $37970 worth of secure hardware.

Sure, maybe the controller can't hack the sub, but the hacked controller could be set to execute repeated down-arrows on the night of the enemy's attack.

Im thinking all you need is one compromised element in a trusted hardware platform that is assumed to be secure. the near $40000 price tag doesnt immediately suggest the hardware is any more secure than two tin cans and a string. any idea what sort of security features are involved?

Indeed. I've actually purchased the components for rugged joysticks (e.g., as found on things like motorized wheelchairs and industrial equipment). The joystick unit itself, with rubber "boot" and knob, is about 200 bucks from a catalog supplier. Presumably it has some kind of enclosure. But still, either something's going into the joystick, that we don't know about, or somebody's padding the cost a bit. I wouldn't presume that there isn't some something that makes the xbox joystick cost more than 30 bucks when used in the same application.

I mean it looks like it's wired in the picture and your picture involves someone physically hacking it.