Sony’s Playstation Update Hurts More Than it Helps

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Gamers might be feeling let down today. Sony Corp (NYSE:SNE) is recalling the software update for its PlayStation 3 console, following reports that the update has been causing machines to stop working and the failure of certain system functions.

Software updates are usually delivered to game consoles to add additional applications and features, or improve their stability. Users with Sony, Microsoft Corp (NASDAQ:MSFT), and Nintendo Co consoles all have the ability to update their machines themselves, or set them up for an automatic update. However, Sony’s system software update, version 4.45 — intended to deliver more “trophy notification options and improved system stability” — has proven to hurt more than help. Some PlayStation 3 system users have experienced the disappearance of the cross media bar that is used to navigate to different functions on the machine, according to Dan Race, a Playstation spokesman.

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Due to the problem, the 4.45 has temporarily been taken offline.

This software update hiccup demonstrates just another setback that Sony’s electronic business has had to endure. While the segment used to be booming, it has since seen a significant sales slump. The company has found greater success from its movie studio and record label, instigating investor Daniel Loeb of Third Point LLC to recently write Sony in an attempt to convince Sony Chief Executive Officer Kazuo Hirai that the company should spin off 15 to 20 percent of its entertainment arm, which includes Sony’s movies and music.  Loeb believes an initial public offering would give Sony the cash needed to revive its electronics business. Sony is considering Loeb’s proposals, but has shown great reluctance to split the company in the past.

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Faced with competition from cheap or free gaming options on tablets and smartphones, the gaming industry has had trouble enticing consumers to buy their new products. While physical gaming sales totaled $517 million in May 2012, they only posted a paltry $383.3 million in the same month the following year. Both Microsoft and Sony have attempted to revive their businesses and launch fresh products — Microsoft came out with the Xbox 360 in May and Sony’s Playstation 4 will arrive later in the year — but both of the companies will have to adjust their gaming options in order to better compete with the cheap mobile games that are currently flooding the market.

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