Sony hacked again, and again

It is becoming a permanent headline

sony logoSony’s ostrich approach to security is bearing fruit, yet another site was hacked and another 1 million accounts compromised, this time, it was Sony Picture Entertainment.

Back in the 2000’s Sony started to envision a different strategy for its products. While Sony was known for manufacturing high quality hardware, the company decided that it was not enough to keep the margins high and the shareholders happy, so they envisioned going online. You would have a Bravia TV receiving exclusive content from the web, the Bravia TV would be controlling a Sony home theater through HDMI-CEC, you would have also a PS3, which would be your blu-ray player, stream movies and play games, a big chunk of this content sold through PSN.

To do that Sony would have to build a network with plenty of content and secure enough that people would trust their data, including credit card, to the company as the buying process would not have to be cumbersome. Sony had a very good gaming platform, the company is also produces very high quality content, it just had to link everything and start selling. People would only have to trust, and trust is the very thing hit by the hacking. The ongoing, continued, repeated hacking.

The company again started their standard procedure: Issue apologies, as if it would undo the hacking, and sent their security teams to “investigate” the flaw. Sony does seems to realise that as an institution, they are under attack and every single site they have on the web is under attack.  While they may become a fortress when they overhaul their IT infrastructure, it will be a fortress that people will be wary to trust.

The company has, so far, accrued 171 million lost in operating profits due to the hacking, and if the 2 USD per customer record leaked tag is real, then the last hacking, just 1 million of records, is argent de poche for the company. What we should look in the future is the revenue line of the division. The company was pretty clear when they said that the 2USD price tag did not include any type of lawsuits costs that the company might bear, so the costs might balloon in the next quarters.

As Sony had not enough bad news, Xbox360 sales are gaining momentum due to Kinect. This console is presenting a sales curve as if it were a new console. It will be interesting to see how the PS3 fares in the next month or so, and we still have to see if the hacking community will make PS3 homebrew firmware able to connect to PSN. If they do, Sony will have a very hard time with developers. They will have to justify how to charge more per game on a platform that people do not trust to buy online, is vulnerable to piracy and has a smaller user base than the Xbox360. In other words, the PS3 is done for, and the PS3 is central to Sony’s online strategy.

The bad part is that the company’s response to these incidents was to announce the development of a new platform, the PS4. It will not be enough. The PS4 will only be a good business platform if people trust them, and being slow in telling your customers that you lost their data, being vague on what you did to remedy the problem and issuing welcome back gifts is not the right way to rebuild trust.S|A

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Marcelo Tavares

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