Today Sony announced it will be pulling CDs with its controversial rootkit copy-protection scheme from shelves and halting production. For those of you who aren’t familiar – these CDs installed virus-like software to stop you from copying CDs that is impossible to remove. And there are now trojans out there latching onto this vulnerability corrupt your whole machine. While today’s announcement is the final step in a two week campaign of damage control, the bad press may hurt more than Sony’s music business.

Here’s just one example of how Sony may be shooting itself in the foot with copy protection. DVDFile recently wrote about some of the copy protection implemented in the Blu-ray format. They can restrict what players a disc plays on and revoke your privileges to view a disc you bought. It’s unlikely they’ll actually use all these features on movies. But its not hard to imagine them saying you can only play your PlayStation 3 games on one system.

I don’t know what Sony is planning, but they better be careful. They have a lot riding on the launch of the much-anticipated PS3 system and they will have to compete with a very strong showing from Microsoft. I have to say that all this copy protection talk has made me very wary and has me leaning towards the Xbox 360 rather than the PS3.