Sony (NYSE:SNE) showed a lot of promise with its most recent quarter, but it still has plenty of challenges. Not least of these is its loss of traction on what was once one of its hottest areas -- its gaming console segment.

The huge Japanese conglomerate reported a major boost in its second-quarter profits, skyrocketing to $641 million from a mere $14 million last year at this time. Bear in mind that Sony took some massive hits last year -- for example, related to its huge battery recall for laptops from companies like Apple (NASDAQ:AAPL), Lenovo, Dell (NASDAQ:DELL), and even its own laptops. Also bear in mind that it had delayed launch of the PlayStation 3, and the console hadn't even been launched last year at this time.

Sony's total sales increased 15% on a U.S. dollar basis (or 12.3% in the local currency, the yen). The consumer electronics segment, which includes its Bravia televisions, Vaio PCs, and Cyber-Shot digital cameras, offered a big boost to the top-line growth.

While the gaming segment did contribute a 43% increase in sales, one of Sony's current sticking points is mentioned in the company's earnings release. Sony said the gaming segment's operating loss increased in the quarter, "primarily due to the loss arising from strategic pricing of PS3 at points lower than its production cost." That operating loss was a whopping $841 million. Most of us realized this was coming, of course. Competition from Microsoft's (NASDAQ:MSFT) Xbox and the surprise superstar, Nintendo's (OTC BB: NTDOY.PK) Wii, have left Sony changing pricing and features on the PS3 so frequently that it's downright confusing to track (and increasingly worsening the lack of profitability on the machines with every price cut).

Sony may have reported a decent increase in its quarterly profit, but if you flash back, last year's second-quarter results were pretty awful, so it was up against an easy comparison. I've long been a Sony bear, and given some of its strategic missteps over the last couple years and the magnitude of its competition, I still feel it's a stock I would avoid. Some investors were heartened by the second quarter, judging by the stock's increase today, but I'm not won over yet.

Microsoft and Dell are Motley Fool Inside Value picks. Dell is also a Motley Fool Stock Advisor recommendation, as is Nintendo.

Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy.