It's hard to fathom how a company as big as Sony Corp. (6758) could have such porous defenses, as the events in recent weeks have unfolded.  Since late April, Sony has experienced a complete loss of customer records from its two largest international databases -- the PlayStation Network (PSN) database and the Sony Online Entertainment (SOE) database.  

Last week, the PSN network was briefly reactivated and then shut down after yet another security flaw was discovered.  And Japan announced that it would not be allowing Sony's online services to restart in its nation until the company showed proper proof that it had significantly improved its security.

Now yet those pesky hackers have compromised another Sony online property.   

I.  Third Sony Database Breached

This week a poster dumped a pretty interesting archive to text sharing site pastebin.  The record appears to contain a dump of the user database from Sony BMG in Greece.

Included in the post are usernames, real names, and email addresses.  

The post was eventually attributed to The Hacker News, who says they received the information from a hacker who goes by the handle "b4d_vipera".  The hacker appears to have redacted the information from certain fields, including password, telephone number, and user's company, though they claim to have this information.

In total 8,385 records were lost from SonyMusic.gr -- the website of Sony BMG in Greece.  The breach occurred May 5.

The attack was accomplished via an SQL Injection attack, a type of attack that first originated in the 1990s.  SQL Injection attacks are most commonly used on large entities with multiple websites.  The attacker finds SQL databases on various sites of the target and then tests them by sending strings that may be mishandled by the SQL Interpreter, allowing forbidden commands to be executed.

It is unclear whether the only Sony BMG in Greece was vulnerable or whether Sony BMG sites in other nations could have been vulnerable as well.

Security software and services vendor Sophos gave some interesting analysis on the breach in their Naked Security blog.   The blog suggests that the negligence likely wasn't the fault of Sony's engineers on the design side.  Writes Sophos's Chester Wisniewski:

As I mentioned in the Sophos Security Chet Chat 59 podcast at the beginning of the month, it is nearly impossible to run a totally secure web presence, especially when you are the size of Sony. As long as it is popular within the hacker community to expose Sony's flaws, we are likely to continue seeing successful attacks against them.

But Mr. Wisniewski says that Sony could have avoided these issues if had hired experts to do thorough penetration testing (fake attacks that look to simulate a malicious user to find and fix vulnerabilities).  He writes:

The lesson I take away from this is similar to other stories we have published on data breaches. It would cost far less to perform thorough penetration tests than to suffer the loss of trust, fines, disclosure costs and loss of reputation these incidents have resulted in.

He says that while Sony obviously is suffering from the barrage of attacks, at the end of the day it may be forced into having the most secure design on the market, much like Windows OS maker Microsoft Corp. (MSFT).  He comments, "While it's cruel to kick someone while they're down, when this is over, Sony may end up being one of the most secure web assets on the net."

II. The Cost to Sony

Richard Scott, a contributor of iconic infographics to BBC News and The New York Times, has set his sights on Sony with his latest graphic.  It depicts an estimated cost to Sony of $24B USD.

That estimate comes from research by The Ponemon Institute, a data-security research firm, who found that on average in 2010 a data breach cost a company $318 USD per lost record in security, user protection, and legal costs.  That represents a 48 percent increase from 2009.

Forbes suggests the $24B USD figure, but that's only considering the PSN breach.  With the 24 million record SOE breach added in, the figure soars to $32.1B USD.

Sony is being conservative in its own cost estimates.  Its financial filings have indicated that the intrusions are clearly taking their toll on the company -- it went from predicting a ¥70B ($855M USD) profit for the year to now predicting a ¥260B ($3.14B USD) loss [source; PDF].  Sony blames much of that estimated loss on the earthquake (¥22B) and other factors.

The company say its expects only to have to pay ¥14B (about $172M USD) for the PSN intrusion.  This puts its expected expense per lost record at about $2 USD per account.

It seems Sony may be a bit too optimistic here.  If the industry average is $318 USD per lost record, it'd be extraordinary for Sony to get away with only paying $2 USD per record.

In 2010 Sony made $77.5B USD in revenue, with a $289M USD profit.  If it was forced to pay a $32.1B USD in total (based on the industry average) for the breaches it could end up with a net loss of $35B USD or more for this year.

A $35B USD loss would be equivalent to approximately half the company's annual revenue and equivalent to over 10 years in profit from relatively "good" years.  It remains to be seen exactly how dire the financial situation for Sony gets, but one thing's for sure -- the picture isn't pretty.

Sony is currently facing multiple class action lawsuits in the U.S. and abroad from former customers.