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Because look how popular it is.

NGU has had thousands of new members sign up recently, and NGU has made over a thousand dollars worth of donations in SIX DAYS.

There were 1697 users on yesterday.

This is all because of the CFW.

And that's JUST NGU, think of the people on other sites, the ones who got it through their friends etc. and it's not much of an overstatement to say that soon 10% of ALL PS3 users that have PSN will have the CFW.

Sony is in direct competition with Microsoft, especially with the release of Kinect and PS Move.

Do you REALLY think Sony can afford to lose 10% of their consumers right now?

UPDATE: So a lot of people are bringing up the whole "Piracy" thing...

Well, most of the people with the CFW only want it for MW2 lobbies, so that means that a very few percent of the people who get the CFW will use it for piracy.

On top of this, NOBODY has edited the lv2 and the kernel to allow the Backup Manager to be used, and chances are nobody is gonna be bothered to do it because nearly EVERYONE on this site just leeches.

Then theres the few people who will try, but won't be able to do it...

And then there's the odd couple who will try AND be able to...

Odds are if those few people manage to do that, and get the Backup Manager on PS3, they WON'T release it, why? Because although Sony most likely CAN'T patch the firmware, they CAN block the MD5 hash of the programs, and set a function to automatically IP ban any user running a program with that MD5 hash while on PSN. If they widely release it, there's more chance that Sony will introduce a check for that MD5 hash.

With that in mind, that means anyone going on PSN while running the Backup Manager CAN be banned, which would stop most people from using it.

As I've said before, Sony can just stop people from going online when they're booting the games from the hard drive, which will stop a lot of people...

Hmm, maybe I'll try this on my PS3 that's already banned.

This is stupid Sony will still try and ban it if they can. They will not lose consumers over this. This makes no sense why would they care about a hacking community over their console. They would obviously choose the console because once it's hacked they will probably lose more money over games producers games being pirated resulting in loss of sales. Also it goes against Sony themselves /facepalm

Sigh, I've updated the original post to explain the whole Backup Manager thing...