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According to sources, Microsoft has begun testing a Surface smartwatch prototype.

The company, who has been reportedly prototyping smartwatches, had now moved the devices over to their Surface team from the Xbox division.

Microsoft has been reportedly requesting 1.5-inch displays from component suppliers, and testing smaller devices with the Surface connector.

The removable wrist bands will come in blue, red, yellow, black, white, and grey, similar to how the Surface features colorful Touch covers.

Finally, the device (at least in protoype) uses Oxynitride Aluminum, a "translucent aluminum" is over 200 percent harder than glass. The prototypes run on a modified Windows 8.

In 2011, Sony made headline after headline when their PlayStation Network was breached and personal information on over 100 million customers were stolen.

The independent European authority, Information Commissioner's Office (ICO), fined Sony £250,000 over the breaching, saying they should have been better prepared. At the time, the ICO said "Sony is a company that trades on its technical expertise, and there's no doubt in my mind that they had access to both the technical knowledge and the resources to keep this information safe."

ICO, via its bio, is "set up to uphold information rights in the public interest, promoting openness by public bodies and data privacy for individuals."

Sony had decided it would appeal the fine, but has now reversed that decision: "After careful consideration we are withdrawing our appeal. This decision reflects our commitment to protect the confidentiality of our network security from disclosures in the course of the proceeding. We continue to disagree with the decision on the merits."

It appears that HTC will be building their own phablet device, supposedly named the HTC One Max.

The 6-inch, 1080p device will rival the upcoming Samsung Galaxy Note 3, and Sony's Xperia Z Ultra.

Under the hood, the device will have a 2.3GHz quad-core Snapdragon 800, 2GB RAM, 32GB internal storage and allegedly launch in September.

Samsung has unveiled their Galaxy Note devices during the IFA event each year (September 6-11), and this year should see the launch of the GN3.

The One Max is expected to look similar to the (pictured) HTC One.

Pebble, the smartwatch startup that became the highest-grossing Kickstarter campaign of all-time, has reached 275,000 watches sold.

Co-founder Eric Migicovsky says the company has received 190,000 orders through its site, following 85,000 through Kickstarter a year ago.

The company recently announced availability at Best Buy retail stores, and Migicovsky says The Pebble is sold out at many locations already.

After months of delays and many technical difficulties for early adopters, shipping seems to have stabilized for the most part, so the co-founder says priorities have shifted, this time to developers.

"Our focus as a company is now shifting to supporting third-party developers," Migicovsky says. "This means our developer tools will get better, we'll be focusing on how developers can get their tools out to users. It's in our best interest, as well as in the interest of developers to share this these stories."

The company has also now seen over 1 million downloads for its apps via Android and iOS.

Amazon has signed a new deal with Miramax that will add hundreds of films to their Prime Instant Video streaming service.

Among the more popular titles are "Pulp Fiction," "Good Will Hunting," "Life Is Beautiful," "The English Patient," "Kill Bill," "Amelie," "Reservoir Dogs," and "Trainspotting."

Prime is available on PC, Macs, iOS, Android, Kindle Fire, Roku, most Internet-connected TVs and Blu-ray players and current-generation video game consoles.

Amazon Prime costs $79 per year and gives users free 2-day shipping on hundreds of thousands of items through the e-commerce site and free access to the streaming video service.

Rakuten, the quiet e-commerce giant behind brands like Buy.com and Kobo, has launched an official beta of its Wuaki video streaming sevice in the UK.

The company purchased Wuaki in 2012 from its Spanish owners. The site expects to roll out the service across Europe over the course of the next two years.

"The UK is the first stop in Wuaki.tv´s European expansion beyond the company's home market in Spain. Wuaki.tv has a long term aim of becoming a leader in the European VOD space, and is planning to complete launches in the main European countries, in addition to the UK and Spain, within the next 18-24 months," Wuaki's CEO Jacinto Roca noted. "A detailed plan will be confirmed in the next few months, following the UK launch and initial feedback and results in that market."

In the UK, the service will launch with "thousands of hours" of content, including TV and movies from Warner Bros., Disney, Sony Pictures, 20th Century Fox and the BBC.

Netflix has now moved into the "talks" stage for a new season of Arrested Development.

Brian Grazer of Imagine Entertainment confirmed the talks. Grazer is a producer of the series.

"We are in conversations with them to do another," added Grazer. "[Netflix is] interested in doing that."

The fourth season was released in May nearly seven years after the cult classic show was canceled after a three season run. Although the show launched to much hype, fans of the show were mixed in their reviews.

Netflix has recently invested heavily in original programming, and the strategy appears to be paying off. "House of Cards" and "Hemlock Grove" (not to mention Arrested Development) each saw strong viewership numbers and were renewed.

The streaming company's most recent series, "Orange is the New Black" debuted on July 11th.

Instead of selling the popular streaming service, NBCU, 21st Century Fox and Walt Disney have decided to cancel the auction after final bidding.

The companies will keep their joint ownership and also provide a $750 million cash infusion to help propel future earnings and growth.

"Hulu has emerged as one of the most consumer friendly, technologically innovative viewing platforms in the digital era. As its evolution continues, Disney and its partners are committing resources to enable Hulu to achieve its maximum potential," said Robert A. Iger, Chairman and CEO, The Walt Disney Company.

"We believe the best path forward for Hulu is a meaningful recapitalization that will further accelerate its growth under the current ownership structure," added Chase Carey, President and Chief Operating Officer of 21st Century Fox. "We had meaningful conversations with a number of potential partners and buyers, each with impressive plans and offers to match, but with 21st Century Fox and Disney fully aligned in our collective vision and goals for the business, we decided to continue to empower the Hulu team, in this fashion, to continue the incredible momentum they've built over the last few years."

Despite once announcing that they would be sticking to Android and not making Windows Phone devices, LG appears to be having a change of heart.

The mobile phone maker, according to a new report, is now working on their first Windows Phone 8 smartphone, with release expected for later this year.

Microsoft's operating system currently only has 3.2 percent global market share, and could certainly use extra models on the market, especially from one of the biggest five manufacturers on the planet.

LG's Managing Director for the Indian market Soon H Kwon is quoted as saying, "At home (South Korea), we are actually working on our Windows Phone 8 OS powered smartphone."

In prototype now, the company has not committed to actually shipping the phone, however.

Nintendo, who recently pushed out a software update for the Wii U, has said today that the update will not include the performance updates the gaming company promised for the summer.

The new update has a few minor updates, mainly bug fixes and minor support enhancements.

Nintendo's larger update has been delayed until the fall, although the timetable is unclear except that it will be near the end of September.

That update should drastically improve laggy performance of the console, President Iwata noted three months ago.

Microsoft will be cutting the price of the Surface RT tablet this week, in an effort to move stale unit stock.

The base model, which currently sells for $500, will drop to $350 including its 32GB of internal storage. The 64GB model will sell for $450, matching the price of the 32GB model with the special Touch Cover. The 64GB with Touch Cover will sell for $550.

Microsoft recently began selling Surface RTs to schools for $199 and has been also clearing out stock at partner conferences.

The company is expected to release sequels to the Surface RT, which runs on Windows RT, and the Surface Pro, which runs on a full version of Windows. The company is rumored to be testing a Snapdragon 800 for the RT and an Intel Haswell for the Pro.

While Microsoft did not confirm a day, Staples says the price cut will go into effect this Sunday.

According to Gartner, PC shipments fell for the fifth straight quarter, the longest streak ever recorded for the industry.

For the Q2, global unit shipments fell 10.9 percent to 76 million, and sales slid in every region recorded. The U.S. finally saw a slowing decline, with sales sliding just 1.4 percent.

Rival firm IDC reported a 11.4 percent slide for the quarter, which was actually better than their 11.7 percent projection.

Despite traditional triggers, such as the launch of Windows 8 and new, more efficient processors from Intel, sales have continued to slump.

Lenovo took the crown with 16.7 percent of all shipments, beating out long time king HP at 16.3 percent. Dell took third at 11.8 percent. Lenovo saw just a 0.6 percent drop for the quarter compared to a massive 4.8 percent decline for HP and a 3.9 percent decline for Dell.

According to BGR, BlackBerry is planning one last flagship for 2013, the A10.

The A10 will have a 5-inch SuperAMOLED display, a high-end dual-core processor, 2GB RAM and an updated design that is said to resemble the Galaxy S4, except rounder.

BlackBerry will shy away from quad-core processors again as a way to help conserve battery life for the device.

At launch, BlackBerry is expected to tout gaming capabilities, says the report.

Earlier this week, we reported on the first GTA V gameplay trailer, which featured 5-minutes of narrative and real footage from actual gameplay.

When asked, Rockstar Games has confirmed the footage came from the PS3 version of the game: "Just to clarify for those asking, this particular video was captured with footage from the PS3 version of the game."
Some had speculated that the footage had been taken from the oft-rumored but never confirmed PC version of the game.

A job listing recently called for a graphic programmer to join Rockstar Leeds. The post was removed but was already shared across the net: "Rockstar Leeds are currently looking for a talented graphics programmer to help bring our latest titles to the PC platform," it read, "working together with the other Rockstar studios, you will be responsible for maintaining the studio's uncompromising quality bar, delivering the highest quality PC experience possible."

GTA V will feature three protagonists, each of which are already established in the world, unlike in past games where you really have to start from the bottom. The game allows you to control all the characters at any time you want and others move to "autopilot" until you switch back.

While all the major publishers involved settled before going to trial, Apple tried their luck with a court case.

A federal judge has ruled today that Apple is guilty of conspiring with five major book publishers to raise e-book prices. U.S. District Judge Denise Cote in Manhattan says she found "compelling evidence" that Apple repeatedly violated federal antitrust law by conspiring and eventually eliminating competition and raising ebook prices for consumers.

The case was brought by the U.S. DOJ and 33 U.S. states and should expose Apple to damages that could be in the hundreds of millions. The publishers settled for $166 million combined but Apple's share may be triple that.

"Apple chose to join forces with the publisher defendants to raise e-book prices and equipped them with the means to do so," Cote said in a 159-page decision. "Without Apple's orchestration of this conspiracy, it would not have succeeded as it did."

The "agency model" of pricing created by Apple in 2010 before the launch of the iPad, had publishers set the price for ebooks while retailers took a commission, normally 30 percent. This led to higher prices for consumers, with Cote saying average prices went up 18 percent.