Look, this is the way I see it all having gone down. Yes I make some assumptions, most which are the most logical ones to make and yeah I'm a bit biased towards Sony occasionally because I think Krazy Ken was a forward-thinking genius business man. But whatever, this is what I think happened:
PSP and PS3 came around. Sony said we're going to be THE GOOD GUYS and give highly open systems that allow users to do tons of things like play mp3s/movie files/look at photos/run an entire operating system/play games from all regions/have a million options like a mini-PC.
Then PSP got hacked and it got REALLY hacked. CFW was so easy to get on and why buy games when you could download them screamed the public. PSP went from being the first real challenger to Nintendo to the biggest Disaster ever for Sony in the western territories. In Japan they were lucky able to turn it around with Square Enix AAA games and Monster Hunter releasing with new revisions that couldn't use CFW. But in the west, the death of the PSP software, which lead to the death of devs MAKING PSP software, which lead to the death of PSP sales, that not only completely fucked the PSP system as a successful hardware device, but even worse has made NGP into a huge gamble because it may just be impossible for them to sell it in the west anymore after the disaster that was the PSP; yes...it was bad. A billion upon billion dollar business plan spanning more than a decade, all a complete failure outside of Japan. All because it got pirated too easily.
Now here comes PS3. It's already struggling due to $599, stupid RSX leading to inferior ports, inferior online, no cheevs early on, strong Xbox brand. But hey, eventually Sony starts seeing a glimmer of Hope as the PS3 sloooowly but surely starts doing almost ok. It's no Wii or X360, but it's looking like it may turn out profitable and not be a total failure but just not a huge success. It might do ...alright.
Then PS3 gets hacked. Sure it's just a smaller "hello world" but once you get into the system, Sony knew it'd only be a matter of time until the pirates got full control and could play bootleg games. If this happened and was easy for people to do and word got out to the public that they could download games like the PSP instead of buying them...well Sony knew there was a possibility the PS3 would go down the same road as the PSP did in the west and the thought of the PS3 dying horribly over a few years as ANOTHER major business failure scared the shit out of Sony. If PSP flopped in the west and PS3 flopped in the west and both possibly damning their successors, then they were on the path out of business because as Japanese sales become less and less relevant, you can't have your entire game company hedge on Japan and be doomed everywhere else.
So yeah, they were going to do every thing possibly to prevent pirated games on the PS3. They didn't care if they fucked over legitimate buyers, fucked over the legal system, fucked over hackers, fucked over everyone in the world. It was death or success with limited causalities. There was no middle ground. They did not want to go out of business and be forced to leave the game industry. So they removed Linux, patched like crazy, lied and sued and lied and who knows if they even thought that "hey, this might piss some people off enough to do something back at us". They were probably too focused on "STOP THE PIRATED GAMES BY SCARE TACTICS".
And then they got blindsided and bit hard. Made a fool of in front of the entire world, lost billions of revenue, got every publisher and consumer to hate them. They tried to get out of it through vagueness/lies/apologies like certain government entities, but it just made people even more made and created a bullseye on their company to continually keep fucking them over as hard and fast as possibly until they die and go out of business because then all these people will say "Sony got what was coming to them".
Thus in the end Sony will get what is coming to them as they're going to be targets of hackers like the PSP was for years to come because of this debacle. Whether they can recover in the public trust through continuous flops that are broadcast around the world, who knows. I can't see this doing anything but hurting PS3 sales/NGP sales/PS4 sales for the future to come. Honestly, Sony is at fault here because they chose to be the bulldog and play dirty; but I can sympathize with the situation they were in after the PSP disaster and not knowing any other way than to brute force attempt to prevent a fully hacked pirated system. They were in a rock and a hard place and either way they were doomed.
It'll be interesting to see what happens financially to them in the long-term. They don't have the money reserves that Nintendo or MS has to go decades of disasters. Either this will all blow over and they find some successes, or they're going to have to file bankruptcy at some point and bow out of the game industry.
If there's a lesson to be learned from all this it's that sometimes bad luck will bite you in the ass and you won't even know it until years later.
