By Ian Sherr

Sony Corp. is preparing to release its first major game for the PlayStation Network online gaming service since hackers broke in and stole account information from millions of users earlier this year.

The game’s release marks a milestone for the Japanese electronics giant in its ongoing recovery from the hacking attacks that occurred in mid-April, which compromised the personal information of roughly 77 million accounts in the system.

Sony voluntarily shut down its network for roughly a month, slowly bringing back different levels of functionality over time. The company said 94% of preoutage activity returned immediately, and that it hit 100% over the summer. The company says it has also added 3 million accounts since the outage.

This holiday season, led by Sony’s “Uncharted 3: Drake’s Deception,” will be the next test of the system. The game will be released on Nov. 1, and will join this year’s slate of high-profile games that rely heavily on network components, including Activision Blizzard Inc.’s “Call of Duty: Modern Warfare 3″ game and Electronic Arts Inc.’s “Battlefield 3.”

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(Originally published Oct. 27, 2011 in the Wall Street Journal.)

By Ian Sherr

Aiming to take a bite out of Apple Inc., Sony Corp. is revamping its retail stores, integrating the Japanese electronics behemoth’s sprawling product line into a sleek and fresh new look.

On April 1, Sony opened a self-branded store, in the high-end Westfield Century City Mall in Los Angeles. The store, with hardwood floors and sleek lighting fixtures, echoes Apple’s airy retail concept.

Sony’s Los Angeles store is the first in a series that is expected to replace the company’s existing chain of retail shops, called Sony Style. The Tokyo-based company hopes the renewed retail presence will reinvigorate enthusiasm for products, like its Vaio laptops and Walkman music players, both of which have been lapped by Apple’s competing devices.

Sony wants the retail effort to set its computers and televisions apart in the minds of buyers. That was one of the strategies behind Apple’s chain of stores, which helped solidify consumer identification of its products.

“It’s not an electronics store,” said Phil Molyneux, president of Sony Electronics in the U.S. “It’s a Sony Store.”

Sony’s new retail outlets mark a complete rethinking of its existing strategy. The roughly 30 existing Sony Style stores in the U.S. are cluttered. Many have dark lighting, resulting in a heavy mood. The new store designs take a different tack.

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(Originally published June 15, 2011, in the Wall Street Journal.)

By Ian Sherr and Nick Wingfield

On a Tuesday afternoon last month, engineers working for Sony Corp. were baffled when several servers running the company’s PlayStation Network suddenly turned themselves off and then back on.

At the time, the unexpected rebooting seemed like an odd malfunction. The next day, however, the engineers found the first evidence that an intruder had penetrated Sony’s systems, prompting the Japanese company to take what it calls “the almost unprecedented step” of shutting down the popular online gaming network.

Sony Chief Executive Howard Stringer issued a public apology this week for what the company later disclosed was a data breach that compromised more than 100 million user accounts on three public networks, and a delay in informing users of the theft. Sony says the loss included users’ names, birthdates and passwords. It also hasn’t ruled out the loss of credit card numbers associated with the Sony PlayStation network.

Some analysts believe the incident, which has drawn the attention of authorities around the world, will cost the company more than $1 billion for measures that include new security and a $1 million insurance policy for any victims of identity theft. The company hasn’t provided its own estimate of the cost. It also hasn’t resumed operating the network, but has said it is in final testing and is expected to do so within days.

“Taken as a whole, the number of customers affected, the PR impact and now the legislative inquiries,” this ranks “at the top” of data breaches to date, said Cynthia Larose, an attorney specializing in privacy matters with Mintz Levin in Boston.

PlayStation Network, which is accessed by owners of Sony game consoles, uses 130 server systems, 50 software programs and has 77 million user accounts, according to a letter that Kazuo Hirai, president and group chief executive of Sony Computer Entertainment Inc., sent Wednesday to a U.S. congressional committee. That letter, and a similar account included in a letter Friday to Sen. Richard Blumenthal (D., Conn.) provide the most detailed accounts of the incident.

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(Originally published May 7, 2011, in the Wall Street Journal.)

By Ian Sherr

New details emerged about Sony Corp.’s investigation into one of the biggest data breaches in history, as the company attempts to piece together who stole personal information from more than 100 million accounts on its online game networks.

At least some of the attacks came from a Malaysia-based server, a person familiar with the matter said, though it wasn’t clear if any of the hacking was actually done from there, or whether only the server there was used.

On Tuesday, a U.S. spokesman for Sony confirmed some of the companies helping to investigate the breach and secure its network against further intrusions. The security firms named are Protiviti Inc., Guidance Software Inc. and Data Forté Corp., which specialize variously in forensic computer investigations and security consulting.

The company has also retained the services of the law firm Baker & McKenzie in connection with the matter. Representatives of the law firm and two of the security firms didn’t respond to requests for comment. Guidance Software declined to comment.

Political pressure on Sony for a more complete accounting of its handling of the data breach has been increasing. Sen. Richard Blumenthal (D., Conn.) on Tuesday sent a letter to Sony executives saying he is “deeply concerned about the egregious inadequacy of Sony’s efforts thus far to notify its customers of these breaches or to provide adequate protections for users whose personal and financial information may have been compromised.”

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(Originally published May 4, 2011, in the Wall Street Journal.)

By Ian Sherr

Plaintiffs lawyers are targeting Sony Corp. with class-action suits after a breach of the company’s online-game network compromised the personal information of millions of users.

In one lawsuit, filed in the U.S. District Court’s Northern District of California, videogame player Kristopher Johns said Sony’s security was negligently poor and the company failed to encrypt personal information.

The lawsuit, which was filed Wednesday against Sony’s U.S. entertainment unit and seeks class-action status, also alleges Sony failed to notify customers of the breach in a timely manner.

“This has caused, and continues to cause, millions of consumers fear, apprehension, and damage,” the filing said.

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(Originally published April 29, 2011, on the Wall Street Journal website.)

By Nick Wingfield, Ian Sherr and Ben Worthen

A hacker stole the names, birth dates and possibly credit-card numbers for 77 million people who play online videogames through Sony Corp.’s PlayStation console, in what could rank among the biggest data breaches in history.

Sony, whose gaming network has been offline for six days, disclosed Tuesday that an “illegal and unauthorized intrusion” between April 17 and April 19 resulted in the loss of a significant amount of personal information that could be used in identity theft.

The PlayStation Network is used by owners of the company’s game machine to play against one another, chat online and watch movies streamed over the Internet. Sony warned users the intruders may have accessed billing addresses, purchase histories and account information for their children.

Fueled by fast Internet connections, online-gaming services have become global social hubs for tens of millions of people who spend hours competing and cooperating on fantasy quests, combat missions and other activities. People across the globe pay monthly fees to play online-computer games like “World of Warcraft.” Most titles for the PlayStation 3 and Microsoft Corp. Xbox 360 have online components.

Sony warned members of its PlayStation Network and a related entertainment service called Qriocity to closely watch their credit card statements for unauthorized charges. It also told members to be on guard against email, telephone and postal scams aided by the lost personal information.

“While there is no evidence at this time that credit card data was taken, we cannot rule out the possibility,” Sony said in a blog post.

The PlayStation Network, meanwhile, remains out of commission, sowing frustration among gamers. In the blog post, Sony spokesman Patrick Seybold said the company has a “clear path” to restore “some services within a week.”

The incident is a major black eye for the Japanese electronics giant, locked in an increasingly heated battle with Microsoft, Nintendo Co. and other companies in the gaming market. The breach also highlights the trove of personal information stored in online-gaming services.

E.J. Hilbert, a former agent with the Federal Bureau of Investigation who is now a senior vice president at security consulting firm Arixmar, called the compromise of as many as 77 million users accounts “huge.”

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(Originally published April 27, 2011 on the front page of the Wall Street Journal.)

By Ian Sherr

Carmakers are taking apps for a spin.

Automakers from General Motors Co. to Hyundai Motor Co. are using the Consumer Electronics Show to announce plans that will transform dashboards into mini-computers running Internet-connected programs.

For example, Ford Motor Co. debuted an app that will allow owners of its new Focus electric car to schedule charging times from a smartphone. Toyota Motor Co. unveiled a program that lets motorists make reservations via booking site OpenTable.com.

The auto industry’s embrace of apps comes as carmakers look for new ways to differentiate their vehicles from the competition’s. “Internet-connected autos will be among the fastest-growing segments in four years,” said Gartner Inc. analyst Thilo Koslowski.

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(Originally published January 8, 2011 in the Wall Street Journal.)

By Ian Sherr

Three-dimensional televisions are getting another “D” — discount.

Just a year ago, many 3-D TVs cost $1,000 more than regular sets. But during the recently ended holiday season, the gap halved and is set to shrink further.

Now, television makers, many of which had hoped 3-D would boost sales, are sandwiching the technology into their premium televisions while accepting a smaller premium for it. Like thinner displays, energy efficiency and high-definition, 3-D is becoming a “me-too” feature.

“Prices for 3-D TVs will definitely go down this year,” Skott Ahn, chief technology officer and president of LG Electronics Inc., said at the Consumer Electronics Show in Las Vegas. Mr. Ahn said LG would cut the premium it charges for 3-D TVs by 20% this year and build the technology into all of its new models by 2012.

The muted expectations for 3-D television mark a U-turn from last year’s enthusiastic embrace of the technology. Television makers rushed to bring the third dimension into living rooms after witnessing the success of the movie “Avatar.” Walt Disney Co.’s ESPN unit launched sports broadcasts in 3-D. Even Gucci Group N.V. designed stylish eyeglasses for 3-D viewers, hoping to cash in on the expected popularity of the televisions.

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(Originally published January 6, 2011, at Dow Jones Newswires and on WSJ.com.)

By Ian Sherr

The technology behind hit videogames such as “Batman: Arkham Asylum” and “Gears of War 3″ is coming to iPhone and iPad game developers this week, in another sign that mobile gaming is booming on Apple’s platforms.

Epic Games is planning to release an updated version of its game-development tools, known as the Unreal Development Kit, to the public Thursday. The kit, which is free to download, will include new tools to create high-quality graphics and animations on iOS, effectively simplifying and speeding up the development processes for games. Epic doesn’t charge license fees to tinker with the kit nor to make free games. But, if developers want to sell their apps, they have to pay a $99 licensing fee and 25% royalties after the first $5,000 in sales.

“Apple’s App Store is the most vibrant market for mobile gaming,” said Epic co-founder Mark Rein. “If you’re going to make a game for a mobile device, and you want to make the most money, you’re nuts not to make it for iOS.”

Over the past few years, Apple has added technologies to improve the visual capabilities of the iPhone, iPad and iPod Touch. It also has marketed games heavily in both advertising campaigns and in its stores. The Cupertino, Calif.-based electronics maker also hired prominent videogame maker Graeme Devine last year to help manage relationships with top game makers, such as Epic. Devine recently left Apple to create his own games for the company’s mobile devices.

Apple has sold more than 125 million devices using its iOS operating system, strongly competing against the Nintendo DS, which has shipped roughly 135 million units, and the PlayStation Portable, which has sold more than 62 million units.

The results of building on the Apple platform have been good so far for Epic, too.

The company recently released “Infinity Blade,” a fighting game that Mr. Rein said could help usher more games with high-end graphics to iOS. Industry pundits have already pegged Infinity Blade’s sales at more than $1.5 million in its first four days on the market. Apple’s Game Center social network lists more than 300,000 users playing the game at $5.99 a pop.

So, what about Google’s Android operating system?

Mr. Rein said he largely agrees with id Software’s John Carmack, who recently outlined his concerns about the Android platform in an interview with Ars Technica. Among them: the wide variety of Android phones available on the market makes writing applications that can work across the board challenging, and Google’s Android Marketplace doesn’t allow for applications above a certain file size, a definite problem for both Infinity Blade and id Software’s “RAGE,” which are rather large downloads.

But, Mr. Rein said, he expects Google will come up with solutions to those problems over time.

(Originally published December 14, 2010, in the Wall Street Journal Digits Blog, here.)

By Ian Sherr

The holiday shopping season, which starts online Cyber Monday, promises to be very good for Apple Inc.

The Cupertino, Calif.-based consumer electronics giant will likely take advantage of the gift-giving season to flex its muscles, grabbing market share for its popular iPod, iPhone and iPad products.

In particular, analysts say Apple will lock down its dominance of the touchscreen computer market, moving more of its iPad tablet devices through retail partners, including Wal-Mart Stores Inc., Target Corp. and Verizon Wireless. A recent survey by ChangeWave Research found that 9% of holiday shoppers plan to buy an iPad in the next 90 days. Apple has sold more than seven million iPads since the device went on sale in April.

Of course, Apple won’t be the only beneficiary of the season’s spirit. Smartphones are expected to do well as more utilities and productivity apps become available for phones running Google Inc.’s Android operating system, as well as Research In Motion Ltd.’s BlackBerry and Hewlett-Packard Co.’s Palm products. That software, known as apps, gives people a reason—other than making calls—to use their phones.

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(Originally published Nov. 29, 2010, in the Wall Street Journal.)