Microsoft does not deny that their Xbox 360, shown here with its characteristic "red ring of death" failure, has had a 54.2 percent lifetime failure rate.
Microsoft argues, though, that it warranty makes failures only a minor inconvenience

Last week, GameInformer released a survey of 5,000 gamers that claimed the Xbox 360 console had a failure rate of 54.2, and a secondary failure rate much higher than that of other consoles.  The survey looked at the entire run of the Microsoft console -- so it isn't necessarily representative of Microsoft's latest less-failure-prone version of the console.

Microsoft has issued a statement about the report according to Paul Thurrott's SuperSite for Windows.  Interestingly, Microsoft does not deny that the failure rate is that high.  It also does not deny claims that consoles frequently take a month or more to be fixed.

Writes Microsoft:

Microsoft stands behind the Xbox 360 as a superior entertainment console with one of the best warranties in the industry. We are constantly improving the design, manufacture and performance of the console through extensive testing of potential sources of any problems. Xbox 360 is pleased to maintain the title of 'most played console' and the vast majority of Xbox 360 customers have enjoyed a terrific gaming and entertainment experience since their first day, and continue to, day in and day out.

Microsoft's response boils down to two things.  First, Microsoft argues that as its warranty covers many basic repairs, their console's quality problems aren't as a big an issue.  Secondly, the statement references the numerous design improvements that Microsoft has rolled out since the console's introduction, including the Falcon platform, which included a 65 nm die shrink for the CPU, greatly reducing failure rates.

Fans of the Xbox 360 point to Microsoft's lower price than rival Sony as a key selling point.  They also point out that the console's online network leads the industry and that the console boasts the highest attach rate (number of games bought per console) of the next generation consoles.

Detractors, however, point to the high failure rate and cases like one user who had eleven consoles fail on him.  Thanks to their vocal criticism, the phrase RROD ("red ring of death") has entered gamers' colloquial vocabulary (when the Xbox 360 fails, three red LEDs light up, illuminating the ring-shaped power indicator red, hence the RROD).

Microsoft has reportedly spent over $1B USD to repair defective consoles, since the system's launch in November of 2005.

"If you look at the last five years, if you look at what major innovations have occurred in computing technology, every single one of them came from AMD. Not a single innovation came from Intel." -- AMD CEO Hector Ruiz in 2007

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