It seems that the last console standing uncracked has been finally defeated today.
After enjoying 4 years of being uncracked, a new company has released videos of their PSJailbreak USB dongle which - they claim - allows backup and homebrew games to be run from hard disk.
The manufacturer has noted that the dongle supports FAT32 file system and that they are working on supporting NTFS right now. It also noted that the dongle can protect itself from Sony's mandatory firmware updates by blocking them until they are tested and deemed safe by the development team. Online play works fine for now, but there are no guarantees that this will continue in the future.
The videos can be watched here http://www.youtube.com/watch?v=4jOEbZEkp9A&feature=player_embedded and here http://www.youtube.com/watch?annotation_id=annotation_164879&feature=iv&v=8IDaGne0u-4 .
The manufacturer says that final retail units are ready to ship and is accepting preorders right now.
It is worth noting that this is not the first time somebody claims to have broken the Playstation 3 protection and that we've noticed that the Playstation 3 unit used in the videos is a debug console which already has the ability to run unsigned code from hard disk (debug consoles are given to game developers so that they can test their games while they are still in development). For those reasons, we don't recommend preordering a PSJailbreak dongle until we test it and assure you of its effectiveness.