It's interesting to consider that Sony is competing not just against other game machines, but is also in a race to outrun the hackers by enough margin to disincentivize their customers from making unauthorized mods to the device. This goes to what Prof. Yochai Benkler was suggesting in his Coase's Penguin paper, that there is a third mode of production in a digitally networked environment that is social rather than contract in nature. Benkler suggests that peer-based production has a "central characteristic is that groups of individuals successfully collaborate on large-scale projects following a diverse cluster of motivational drives and social signals, rather than either market prices or managerial commands." In this case the result is good for consumers because Sony is forced to run faster than they would normally be incented to in order to deliver the features that the community determines is desireable.
Link: Attack of the PlayStation Hackers.
As early as May, the company's video-game unit, Sony Computer Entertainment (SCEI), had software updates that plugged the PSP's vulnerabilities. In late July, it began a carrot-and-stick approach, warning would-be hackers and enticing them to try out the new upgrades, which added a Web browser and new music-player and photo-viewer.
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