Sony Spits on Innovation

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What do you do when you're afraid of being sued for fumbling your online service? Force customers to agree not to sue you in exchange for using said service. This is innovation, Fool, Sony (NYS: SNE) style.

You may remember that Sony's PlayStation Network suffered a lengthy outage this spring. Hackers apparently took down the system with orchestrated denial-of-service attacks the company wasn't prepared for. Users howled in protest.

In response, Sony has issued new terms for using the PlayStation Network that require users to submit to "negotiation" and ultimately arbitration in the event of a dispute -- with the definition of dispute being any "dispute, claim, or controversy" relating to any Sony service. No lawsuits allowed. PC World writer Matt Peckham, who covers the change in detail, calls the move "awfully crass of them."

Give Peckham credit for being more polite than I can be. Because, as I see it, CEO Howard Stringer is spitting on customers while calling it rain. He's copped out, giving the strategy wheel to lawyers instead of building a better PlayStation Network. Legalese trumps legitimate upgrades, apparently.

Half of me wants to short Sony stock right now. Trouble is, that might be disingenuous. I find myself hoping customers toss their PS2s from a second-story floor in protest, replacing their consoles with new offerings from Microsoft (NAS: MSFT) and Nintendo (OTC BB: NTDOY.PK).

The other half of me wants to scream. How does anyone at Sony think is OK? I feel like I'm stuck in a Seth Meyers skit. Innovation is too expensive. Customers need to just deal. Really, Sony? You couldn't spare a few bucks to create a more secure network? Or at least a quarter to call an ex-hacker and find out what a decent digital lock looks like?

Delivering anything online carries risks. Just ask Adobe Systems (NAS: ADBE) . Hackers have targeted the software supplier continuously, and with some success. But rather than blame customers for taking risks, Adobe works overtime to plug holes. Exactly what a software company should do, Mr. Stringer.

This whole affair makes me sick. Am I the only one? Please weigh in using the comments box below. You can also keep track on the video gaming space by adding any of these stocks to your Foolish watchlist.

At the time this article was published Fool contributorTim Beyersis a member of theMotley Fool Rule Breakersstock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim'sportfolio holdingsandFoolish writings, or connect with him onGoogle+or Twitter, where he goes by@milehighfool. You can also get his insightsdelivered directly to your RSS reader.The Motley Fool owns shares of Microsoft.Motley Fool newsletter serviceshave recommended buying shares of Adobe Systems, Microsoft, and Nintendo, creating a diagonal call position in Adobe Systems, and creating a bull call spread position in Microsoft. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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