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Kristopher Kubicki -- Red Ring of Death
Microsoft will take a $1 billion charge to fix Xbox 360 consoles

Microsoft's Xbox 360 was the first to market in the "next generation" console race and is leading in total sales so far. Nintendo's Wii has been selling at a breakneck pace in the United States, but the Xbox 360 has held a comfortable lead over the Sony PlayStation 3.

Furthermore, Microsoft has a rather palatable portfolio of titles for gamers to choose from along with its robust Xbox Live online service. Microsoft has even reached out to the community with its XNA Game Studio Express developmental software.

But there is one pitfall that Microsoft has not been able to get away from with regards to the Xbox 360: the infamous Red Ring of Death (RROD). The RROD has been the perennial thorn in the side of the Xbox 360.

In September of 2006, Microsoft offered free repairs to customer that purchased Xbox 360 consoles manufactured before 01/01/2006. Microsoft noted that the reason for the generosity was due to "higher than usual number of units coming in for repair."

Three months later in December 2006, Microsoft decided to boost the Xbox 360's warranty to a full year. Customers who had already paid for repair service were mailed checks for the full repair costs by Microsoft. "Customer satisfaction is a central focus and priority for the Xbox 360 system," said Jeff Bell, corporate VP of Global Marketing for Microsoft's Interactive Entertainment Business at the time of the announcement.

Despite Microsoft's best efforts, Xbox 360s afflicted with the RROD continued to roll in for service. In April 2007, the company decided to bulk up its warranty services by offering free shipping for consoles in and out of warranty. Microsoft also announced that customers who sent in consoles under warranty would receive an additional 90 days of warranty service -- in addition, consoles that were sent in for service when out of warranty would be returned with a fresh one-year repair warranty.

At the time, the company also announced faster repair times for consoles (within five business days) and the addition of more staff to handle customers’ needs.

All the while, Microsoft remained mum as to the actual problems with the Xbox 360 and declined to give a failure rate for the console. In May, Microsoft's Peter Moore said that “I can’t comment on failure rates, because it’s just not something  -- it’s a moving target. What this consumer should worry about is the way that we’ve treated him. Y’know, things break, and if we’ve treated him well and fixed his problem, that’s something that we’re focused on right now."

Most had speculated that the problems related to Xbox 360s becoming afflicted with the dreaded RROD was because of lead-free solder joints on the GPU and poor cooling within the case. Xbox 360 consoles with upgraded cooling hardware began appearing in Europe in early June. Microsoft responded with "no comment."

Earlier this week, DailyTech reported that the failure rate for the Xbox 360 was as high as 33 percent according to some retailers -- Microsoft had previously stated that the failure rate for the Xbox 360 was in the three to five percent range. “The real numbers were between 30 to 33 percent,” said former EB Games employee Matthieu G. “We had 35 Xbox 360s at launch. I know more than half of them broke within the first six months (red lights or making circles under the game discs). Two of them were dead on arrival.”

The RROD problem is so bad that some companies have even refused to repair the console. “This problem is endemic on the Xbox 360 console and the volume has made this repair non-viable," said Micromart, a UK-based game console repair company. “The work we had done to the console lead us to believe that basically it was a fault with the motherboard and not something that could be resolved easily. And it wasn't going to go away,” continued Micromart's Jeff Croft.

Although it doesn't appear that Microsoft has made any changes to stop the Xbox 360 from coughing up the dreaded RROD, the company announced today that it will set aside $1 billion USD to fix "an unacceptable number of repairs."

"This is just one of those things that happens when it happens," said Microsoft entertainment and devices division president Robbie Bach. "We reached our conclusion early this week and because it's a financially meaningful issue we had to announce it immediately."

Peter Moore remarked that "The majority of customers who own Xbox 360 consoles have had a terrific experience from their first day, and continue to, day in and day out." He was also humble enough to admit that "Some of you have expressed frustration with the customer experiences you have had with Xbox 360; frustration with having to return your console for service after receiving the general hardware error message on the console."

As a result, Microsoft is extending warranties of Xbox 360s afflicted with the RROD to three years from the date of purchase. The company will also retroactively reimburse repair costs for anyone that sent in their Xbox 360 for the RROD.

"In doing so, Microsoft stands behind its products and takes responsibility to ensure that every Xbox 360 console owner continues to have a fantastic gaming experience," said Moore. "If we have let any of you down in the experience you have had with your Xbox 360, we sincerely apologize. We are taking responsibility and are making these changes to ensure that every Xbox 360 owner continues to have a great experience."

Microsoft’s generosity is commendable, but until the actual cause of the problem is identified and taken care of, this may all be for naught.

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By shabby on 7/5/2007 9:32:35 PM , Rating: 2
Now why didnt they admit this before rather then after the community outcry? If they really cared about its users they wouldnt of side stepped the question weeks ago... moving target my ass.

RE: Great,,,
By tehfire on 7/5/2007 9:47:13 PM , Rating: 5
Holy *explitive*, dude, they just announced possibly the greatest warranty service for all of gamingdom and you're complaining that they didn't do it sooner?

I'll admit, I do like Microsoft, but even I have been worrying about getting a RROD on my console. I'm so happy that they've extended the warranty out to 3 years.

I knew when I bought my 360 that it was only warrantied for 1 year. I bit the bullet and bought it anyways, knowing I may end up getting screwed in the process. These extra warranties are all icing on the cake for me.

RE: Great,,,
By EndPCNoise on 7/6/2007 12:22:13 AM , Rating: 4
Don't prematurely shoot off your rocket launcher just yet boys...

At least wait until you have actually read through this newly revised warranty.

The 3 year extension does not cover problems such as the DVD drive scratching discs as many users have had. Not a RROD issue.

MS did not state that if your 360 dies, without any RROD actually displaying, that the 3 year extension would cover this type of scenario. Many 360 owners have had this problem as well.

These types of issues would still fall under the one year from the original date of purchase warranty.

Link to warranty:

RE: Great,,,
By Lakku on 7/6/2007 9:13:50 AM , Rating: 2
The disc scratching issue has mostly been fixed. My launch 360 scratched the discs after awhile and I got a new one (worked where I got it from at the time, so got a cheap extra warranty). This one doesn't do it anymore. They have had two different updates to the disc drive I believe, including the latest one that is supposedly substantially more quiet. So there's that.

RE: Great,,,
By Mazzer on 7/5/2007 9:48:42 PM , Rating: 1
Why doesn't Sony admit what they have done wrong? It is bad PR. No company wants to admit mistakes and is willing to sidestep as long as they can get away with it. Microsoft can no longer get away with it so they are stepping into the spot light. You would do the exact same thing if you were part of a company trying to be #1.

RE: Great,,,
By shabby on 7/5/2007 10:23:09 PM , Rating: 2
I guess if profit in the #1 priority of my company then yes i would do the same, however there are companies out there who put customer satisfaction ahead of profit.

RE: Great,,,
By Smoza on 7/5/2007 11:31:57 PM , Rating: 5
... Because customer satisfaction leads to more profit most likely

RE: Great,,,
By tuteja1986 on 7/5/2007 11:45:52 PM , Rating: 2
360 goes back into red and Microsoft will not be making profit untill Late 2008 when they have released the new revision with 65nm gpu and 45nm CPU. Also a new cooling system and new a quite DVD Rom.

RE: Great,,,
By Lakku on 7/6/2007 9:15:07 AM , Rating: 2
They already released a new, quieter drive, about 2 or 3 months ago.

RE: Great,,,
By Bioniccrackmonk on 7/6/2007 8:52:06 AM , Rating: 1
Why doesn't Sony admit what they have done wrong?

Why is it that when an article is published about company A that some idiot on the internet feels he has to drag company B into it. This article is in regards to the higher return rate the Xbox 360 has, so if you compare that to the Nintendo Wii and PS3, guess what, Microsoft is the one that messed up here. Not Sony and not Nintendo.

RE: Great,,,
By bhieb on 7/6/2007 2:45:52 PM , Rating: 4
Because without a company B it wouldn't be (pun intended) very good analogy. His point was no company admits a defect immediately, until it is a big enough deal. Now he could have compared MS to Ford, GM or any other big company but since they don't make a console that would be stupid. So Sony and Wii are "OK" to reference in an article about consoles.

Quit being such an ass trolling around waiting to jump on anyone who even mentions Sony in an MS article, even thought it was a vaild point.

RE: Great,,,
By redog on 7/5/2007 10:32:13 PM , Rating: 5
A * B * C = X.

If X is greater than the cost of a recall, we recall the xboxs and no one gets hurt.

If X is less than the cost of a recall, then we don't recall.

RE: Great,,,
By zsouthboy on 7/5/2007 11:10:44 PM , Rating: 2
Nice reference

RE: Great,,,
By SkateNY on 7/5/2007 10:43:17 PM , Rating: 2
I'm no fan of Microsoft--I don't do Windows, and my primary investment has been AAPL for several years now--but their response to the problem has been extraordinary.

(I also don't play video games, nor do I own a game console.)

RE: Great,,,
By SkateNY on 7/5/07, Rating: 0
RE: Great,,,
By jimmy27 on 7/5/2007 11:04:13 PM , Rating: 2
No, if he is talking about the stock, it's AAPL. That is the stock symbol. Unless there was some sarcasm I did not get.

RE: Great,,,
By Smoza on 7/5/2007 11:33:01 PM , Rating: 2
As in apple, i'm guessing...

RE: Great,,,
By elpresidente2075 on 7/7/2007 11:51:00 PM , Rating: 2
Was he not replying to himself?

RE: Great,,,
By colonelclaw on 7/6/2007 8:08:41 AM , Rating: 2
yeah me too. i congratulate MS for being honest about this problem. makes a nice change from the usual 'only a tiny percentage of units are affected' bs
upping the warranty to 3 years means the customer's a winner, and MS is a winner for being honest. and the public likes honest companies.

the only losers here are the MS bean counters

By kilkennycat on 7/5/2007 10:01:07 PM , Rating: 6
Anand published the 'Inside the Xbox360" article on November 6,2005 with an excellent physical description and a very clear set of photographs.

Follows is my reply-posting to this article:-

=====Start of my Reply-posting, Nov 16 2005 ============
Seems as if a fan failure (or blockage of the inlet air passage) could potentially cause catastrophic failure of the critical silicon without effective thermal protection.

Anand, Kris, Tuan:-

Any idea of the nature and effectiveness of the thermal protection -- or wanna carry out a potentially destructive test by blocking up the inlet air on your presumably-rare Xbox360? An important issue for the TYPICAL technically-naive purchaser of the Xbox360, who is likely to be very careless about the Xbox360 ventilation and certainly will forget to regularly clear the inlet air-holes of sticky crud and junk. And what about the close-packed-finned heat-sink on the CPU? Such heat sinks on PC CPUs fill up completely with lint after about 6-9 months in a typical home environment. The Xbox360 is DELIBERATELY built to be non-user accessible for cleaning or any other purpose. A very big mistake. The internal air-duct should have been built on to a user-removable cover to expose the heat-sinks and fans for routine cleaning. I have had my share of cleaning out PCs (edit: heat-sinks) that have become completely blocked up with crud, the first obvious symptom being erratic shut-down of the CPU by the motherboard thermal protection. The Xbox360 dissipates a lot of power in the core silicon --- much more than the old Xbox.

At present, I highly recommend taking a 2-year extended replacement warranty on the Xbox360, so that WHEN ( not IF) the heat-sinks fill up with junk (or the fans fail) and the box begins to function erratically, the owner can get a brand-new one :-) :-) :-)

===============End of Reply-posting =======

I also pointed out in a later comment, the disastrous positioning of the CPU and GPU heatsinks in close-proximity to the DVD-drive, probably systematically overheating it in normal use and certainly overheating it after the heatsinks get blocked up with lint, sticky crud and dog and cat hairs. Notice that nice hand-warmimg game-disk after a few hours of playing a 3D-game? DVD-drives do not like heat any more than hard-disks.

And this new 3-year warranty does not solve the fundamental design problems. It just delays the customer-whines. The poor user who has a failure will probably get somebody else's patched-up box in exchange (and still with the same fundamental design flaws).....certainly not a new one, regardless of any future design improvements. Also, with the new 3-year warranty, is Microsoft now going to reimburse all those Xbox360 owners that took out 3rd-party extended warranties?

Recommendation: Open up your Xbox360 (if you still have one that is trouble-free....) the day when the warranty expires and thoroughly clean the internals. ( Sorry, can't do it beforehand-- breaks the warranty-seal) Repeat the exercise every six months.

BTW, the addition of an extra GPU heatsink in the Xbox360 Elite is a giggle since it does not address the real problems. When (NOT if) the main heatsinks block up with crud, that extra heatsink will be totally starved of forced-air.

By Darthvoy on 7/5/2007 11:57:05 PM , Rating: 2
looks like microsoft should have hired you during the design process.

By kilkennycat on 7/6/2007 12:54:38 AM , Rating: 3
Thanks for the compliment, but I prefer to work with smaller and more flexible outfits. I would hope that the upcoming version of the Xbox360 with the 65nm chip-set has been radically redesigned from ground-up for **long-term reliability in typical user-locations**, not just the same ole' layout and physical package with 65nm chips slapped in place of the 80nm ones. A very small fraction of the $1billion would finance a complete package overhaul of the Xbox360.

I have a lengthy background in design for high reliability in both professional and consumer electronic gear. Designing for reliability is seldom a very expensive exercise even for consumer gear. For the hardware design team of a brand-new non-derivative product, such as the Xbox360, active and deep early participation in the reliability testing of the gear they have designed is essential. The design team generally knows where the design is likely to be weakest and can adjust the testing accordingly to hammer on those areas. Unfortunately, many companies contract out the reliability testing to "generic" test houses with no intimate knowledge of the design and its potential weaknesses. And such reliability testing is usually left too late to influence the core-design. The evidence of that with the Xbox360 is beginning to show, with bandaids such as liberal helpings of epoxy to hold down ball-grid ICs under which the solder is either melting away or crystallizing, because of poor thermal and ventilation design.

Unlike consumer-hardware companies with deep product portfolios and experienced hardware-design teams, such as Panasonic or Sony, Microsoft has no long history of hardware-product design. The Xbox360 is likely to have been a contract-design managed by MS personnel with little or no hardware-design background.

By EndPCNoise on 7/6/2007 1:15:21 AM , Rating: 2
So what are the chances of Todd Holmdahl, the Corporate Vice President of the Xbox Product Group, possibly meeting the same fate as Ken Kutaragi?

By KristopherKubicki on 7/6/2007 3:15:45 AM , Rating: 2
Very good post, and I remember it well.

At the time, there was a lot of concern about the thermal conductivity from the CPU to the HSF -- that was overplayed but eventually Microsoft changed that aspect of the cooling.

I think if you follow all the Xbox 360 criticism, almost every issued raised with the thermal issues received some kind of response -- eventually. Most people assumed the 65nm CPU shrink would address these issues, but here we are almost 2 years later without the shrink.

I really wouldn't be surprised if the shrink comes soon. Microsoft won't keep replacing the existing units with ones that will fail again in 2 years, and everything would indicate the technology is ready now.

By EndPCNoise on 7/6/2007 3:54:50 AM , Rating: 6
You may find this article from interesting...

The error, according to the head of Microsoft’s entertainment and devices division, Robbie Bach, is a “Microsoft design challenge,” not a glitch in the manufacturing process that can be blamed on an assembly plant. Bach said during a conference call that the company has been able to “engineer around,” some of the problems causing the error message, meaning that newly bought Xbox 360s will include hardware fixes, but that those devices won’t be completely redesigned to eliminate the problem.

Microsoft's own Robbie Bach admits it's their design and not manufacturing to fault.

Robbie Bach then talks about a half-a$$ed fix, which does not solve all the RROD problems.

It sounds like the XBOX 360 requires a total and complete redesign to stop these things from croaking. A simple a die shink to 65nm alone, without a redesign, is unlikely to make the XBOX 360 reliable.

By energy1man on 7/7/2007 1:46:01 PM , Rating: 2
This is the link to the location of the actual Microsoft investor relations call:

In the call they say say that the changes they have implemented should drastically cut down on any future occurrences. Taking them at their word the problems should be fixed.

They also commented on the cost breakout of the 1.15 billion charge. 50% to current one year warranty, and 50% to the warranty extension. In this they broke out the costs into two categories, one for repair costs where feasible, and the other for writing off units that are not economically feasible to repair. This should mean that a significant number of people will be getting new units.

They briefly commented on engineering costs, saying that they changes they have made should not have an impact on costs going forward.

By Proteusza on 7/6/2007 6:50:18 AM , Rating: 2
Sadly, I'll bet people at the time (and probably some right now) are thinking what do you know, you dont work for a multi billion dollar company?

But clearly, you were right, and they were wrong, and the XBOx360 could have been far more profitable for them had they tested it properly.

It just goes to show the problems which corporations exhibit - they arent set up to solve problems which they dont understand. now that they know what went wrong in its design process (that being that they didnt ask someone like you to comment on its reliability or lack thereof). corporations have been seen to make the same bad decision twice, but time will tell if the next xbox is better.

question for you - why didnt they do a mini redesign to solve the problem? is it too expensive to change manufacturing processes once they have already begun? Surely the cost of fixing the flaw would be cheaper in the long run than bad press and mass returns?

By Lakku on 7/6/2007 9:24:40 AM , Rating: 2
Good post, except for the heating up of the game-disc issue. I assume you are refering to the fact the game disc itself is hot after you remove it from the 360, after extended use? Well, my PS3 does that with games and movies, so does my 360, and so does my Wii, all 3 make the disc pretty darn hot. My PC also heats up discs after I install a game, and it's nowhere near the rest of the components. I'm not sure the placement near the DVD drive has everything to do with that. Just my 2 cents.

By TomZ on 7/6/2007 1:51:49 PM , Rating: 2
I agree, and one thing to remember is that "warm to the touch" is no problem for most electronics. Most electronic components are good up to 70°C, which is about 160°F, which is pretty hot to the touch, and probably would burn you with a few seconds of sustained exposure.

By bob4432 on 7/6/2007 5:11:53 PM , Rating: 2
i would really like to know what type of thermal compound they used - when i took mine apart to have the gpu hs milled down perfectly flat it was more like some type of tar instead of a thermal compound. removing the xclamp, milling down the hs surface to a near mirror surface and using some as5 dropped the temp of my 360 quite a bit (sorry don't have any temp numbers, just by the feel on my hand) and also now the discs don't come out hot, they are now barely above ambient room temp.

so what is ms going to do about the people that went ahead and opened up their console after the 1yr warranty to fix their design flaw??

my copper gpu prototype hs will be here soon and i will then see how much of a difference that makes :) :)

MS's estimate on RROD
By netrindomain on 7/5/2007 10:50:13 PM , Rating: 2
so this is what we know from Microsoft:

-there are a total 11.6M Xobx 360s sold
-the charge on extended warrantee to 3 years cost about $1.1B
-MS charges out-of-warrantee RROD repair for $140

I know the 1.1B sum is complicated, but there must be a quick and rough way to calculate MS's official RROD rate. Anyone?

RE: MS's estimate on RROD
By energy1man on 7/5/2007 11:48:16 PM , Rating: 2
First you probably can't use the $140 repair charge. It no doubt costs Microsoft more to service than they are charging. If you were to use that rate., you would get 1.15 billion divided by $140, which would come out to about 8.2 million repairs. This would cover two of the three years of warranty service. The first year of warranty repairs would have already been accounted for. Assume the 8.2 million is 66% of the total, you would get about 12.4 million repairs or more units than they have sold. Whatever the defect rate is, it is not that high. An accurate calculation would depend on Microsoft's true cost for the repairs. $300 would put the rate near 48%. $400 would put it near 35%.

RE: MS's estimate on RROD
By netrindomain on 7/6/2007 2:14:16 AM , Rating: 2
At $300-400, we are talking about the RETAIL price of a brand new 360, which is much too high for the cost of repair.

I suppose it's also important to find out whether the 1.1B covers any design cost incurred in improving the thermal solution of current product. Obviously also covers the additional warrantee on units "projected" to be sold over the entire product cycle (which also should be somewhat offset with the new .65 process / board), and additional (cough) administrative costs.

Anyway, thanks for taking the 1st shot. 1.1B IS a lot of $$, and by doing the math it shows that DT wasn't far off with its 30% failure rate report.

RE: MS's estimate on RROD
By darkpaw on 7/6/2007 10:09:11 AM , Rating: 2
For some of their international customers they are already paying the cost of a new xbox just in the shipping alone.

RE: MS's estimate on RROD
By geddarkstorm on 7/6/2007 11:54:46 AM , Rating: 2
No way. I've already dealt with shipping heavier items than an X-box 360 over seas (from the states to New Zealand) and it was only 45 bucks (which is a lot for shipping). 200-300? Nope. Not to mention they undoubtedly have more than one distribution center around the world, or they'd have to charge double to the European market after they shipped all their X-boxes there, by that logic ;)

RE: MS's estimate on RROD
By darkpaw on 7/6/2007 12:00:01 PM , Rating: 2
Sure postal services will run $50. From posts on other xbox failure stories people were reporting that the international shipment boxes were coming from DHL. Having worked in a warehouse for several years I know that even envelopes cost $50 to ship DHL internationally, and they will bill by dimension over weight so even for the empty boxes MS will be paying a good amount.

The company I worked for got really good shipping discounts, and I'm sure MS gets much better then that, but if they are using an express service for shipping the boxes out and back they are probably paying $100-150 per direction.

RE: MS's estimate on RROD
By geddarkstorm on 7/6/2007 12:08:40 PM , Rating: 2
I don't see why they would go with an expensive service if there were a cheaper one. UPS was the one I know the cost for shipping a 20" monitor with from one side of the world to the other. I have a feeling they would pay around 100-150 round trip, not per direction. That per direction is unreasonably high, unless we got actual figures, and are out of line with the actual figures I know from UPS. If DHL was that much higher than UPS, I don't see how they could compete with the latter.

That said, there are still repair centers in more places around the world than the US. And a lot of all this is in the US. So international shipping rates are pretty much moot--they would rarely have to do so verses domestic (or intra EU) shipping.

RE: MS's estimate on RROD
By energy1man on 7/6/2007 1:55:06 PM , Rating: 3
Found this on bloomberg:

Enough money to repair 2,500,000 consoles.

This would put the repair costs between 420-460 with the range of 1.05-1.15 billion dollars.

RE: MS's estimate on RROD
By netrindomain on 7/6/2007 11:12:12 PM , Rating: 2
Thanks for finding the quote.

2.5M out of 11.6M consoles is roughly above 20%, for repairing RROD between year 1 to year 3 by definition.
Factoring in the repair costs of year 1, I suppose that is still within the reported 25-33% range.

as for the repair cost per unit, I still don't buy the $400+ bill as there certainly will be other expenses such as re-designing the board, which by definition also should be part of the "solution" for these failures.

Anyhow I am glad we are going through this exercise instead of yapping "oh 1.1B is a just pocket change" for MS.

RE: MS's estimate on RROD
By geddarkstorm on 7/6/2007 12:04:58 PM , Rating: 2
We must also take into account multiple resends of the same unit, which could easily push the total volume of units through the roof while keeping the number of unique units lower.

Since we know Microsoft preferably sends back refurbished, not new units, we know that the cost for repair is lower than the cost for making a new unit.

Shipping through has to be taken into account if Microsoft is paying for it, which could ratchet things up by another 50 bucks for them depending on the location of the nearest repair/distribution center relative to the customer. Still, 300-400 for repairs is far too high. 200 is probably the better estimate, but still kinda high. The 1.1B set aside is not what has cost them so far and is simply a preventative, so we can't use that exactly for raw numbers, but in all it is in line with a 33% failure rate. Remember, repeat offenders cost them the same each time, so that could inflate the repair costs to look like a 50% or higher failure rate.

If I had an investor's portfolio on the 360, it'd be much easier to calculate their failure rates, since those usually show the costs to make the unit and all other associated costs, and the profits so for. You can't hide info from or lie to your investors. Home Depot tried and they were skinned for it.

RE: MS's estimate on RROD
By netrindomain on 7/6/2007 11:23:09 PM , Rating: 2
I agree that s a manufacturer if your average repair cost, including the expenses of shipping and labor, is higher than your retail price of the product, then you are in big trouble.

However, don't expect companies to be THAT honest with investors. I'd go with iSuppli figures with the BOM. It has been posted around before.

RE: MS's estimate on RROD
By EndPCNoise on 7/6/2007 12:37:44 AM , Rating: 2
The next big question/problem to calculate, once you have calculated the defect rate, is how long before the $1.15 billion dollars (set aside to cover warranty repairs) is exhausted?

RE: MS's estimate on RROD
By energy1man on 7/6/2007 1:09:29 AM , Rating: 3
Assuming Microsoft has fixed the problem, or at least drastically cut it's incidence, and accurately knows it's true defect rate, it should last until the last of any sold units are out of warranty. If for someone reason their calcs are off, they mint enough money to make up any difference.

The one thing to bring from the 1.15 billion is the 3-5% defect rate is very underreported. Take the high end at 5% that would be 580,000 units to fail or expected to fail(there are working units that at some point will fail), 1.15 billion for repairs would come out to nearly $2000 per unit. Not very plausible.

Standing O.
By therealnickdanger on 7/5/2007 9:33:44 PM , Rating: 3
You can be as cynical as you like, question the timing, and call it whatever you want, but this takes a lot of guts (and money) to do. Sure, the warranty extension won't prevent affected consoles from RRODing, but I will certainly feel a lot better if I ever see that ring! My 360 has already gone under the knife once, but not because of RROD, and it was a good experience overall. This is pretty amazing - what other consumer electronics devices have warranties this extensive? It's too bad it's necessary, but I have to commend Microsoft on their decision.

RE: Standing O.
By tehfire on 7/5/2007 9:48:00 PM , Rating: 2

::praying to not be visited by the RROD gods::

RE: Standing O.
By MonkeyPaw on 7/5/2007 9:52:29 PM , Rating: 2
I agree. I had my 360 RROD on me, and MS handled it exceptionally well as far as I'm concerned. The only inconveniences I had during the process was a 10 minute phone call, not having a console for 2 weeks, and a drive to the UPS store (which was on the way home from work). Yeah, it would have been nice to not have any issues in the first place, but I can't complain about the way MS handled it. That can sound like fanboyism, but all I lost was time, which is typically something I waste playing games anyway. Maybe it took MS too long to officially own up to the problem, but in reality, they've been unofficially owning up with their customers by quickly replacing broken machines this entire time. A public apology is nice, but a working console is what people should really be looking for.

RE: Standing O.
By InternetGeek on 7/5/07, Rating: 0
RE: Standing O.
By Marlowe on 7/6/2007 1:19:43 AM , Rating: 2
I agree. Also I "commend" DailyTech for writing 8+ articles in all seriousness on this subject.. they always make me yawn big time every time I see them.. Might be because I know several people with 360s and noone has had any problems tho, except with the noise of course, if they are sensitive to such.

Overall, I'm sure there are plenty of other electronics products with worse repair percentage numbers and with worse service and support policies than what we see here. Can't you write about that instead? Like the 1st gen iPod Nanos or maby some setup DVD players - they seem to brake all the time in my experience..

But I guess the media loves to write about stuff like this. Don't you think MS has tackled this problem pretty well? So I see you are not satisfied with this 3 year expanded warranty wich MS is doing in free will. Can I ask then, what will it take to make you happy? A recall of millions of 360s? Public humuliation and economic ruin?

Because admit it, Microsoft = Devil, Hitler, etc.

RE: Standing O.
By bolders on 7/6/2007 8:49:54 AM , Rating: 2
The only reason Microsoft has extended its warranty is because they are starting to look bad in the public eye and the 360 is starting to get a bad name for itself.

It’s because of the many articles written by Dailytech and the like that people are aware of this problem. This has, in effect, forced Microsoft’s hand. Do you really believe they would do anything about high failure rates if they could carry on as normal and still maintain the same sales figures as they do now?

Microsoft is not your friend; all they want is your hard earned money. They don’t care about the service they provide or if you are happy with their products. All they care about is that you keep giving them your money. The only reason why they produce reasonable products, rather than complete trash, is because that is the only way they can maintain their profits.

It’s not about Microsoft being the devil. Microsoft as well as all other large companies are inherently selfish and care only for themselves. They are not customer focused - they are self centred.
However this is not all bad because it means we as the consumers hold the power. We can dictate how a company should be run by where we choose to spend our money. But we do not use this power. We still buy products and services (in large quantities) from companies that operate in an un-ethical manner (e.g. Apple, Microsoft, Sony, the music industry in general, etc) and in so doing show we acceptance of their actions.

Good news for the PS3 owners
By pammy ut on 7/6/2007 2:21:44 AM , Rating: 1
So it would appear the only thing Sony fanboys had to stand-on and shout about, has now been pulled out from underneath their feet, leaving them and their "mess" of a system to fall flat on the ground. Ouch!

The sound you hear are the cash registers ringing up the mass returns of PS3's to exchange for XBOX360. The poor PS3's owners finally have something to cheer for... a system with lots of good games (as opposed to the pathetic software offerings for the poorly designed, developer hated, "messy" architecture of the inferior sony machine).

Granted, the failure rate of 360's has been grossly exaggerated, but there indeed has been a problem. And that was the primary reason for many people not jumping on board, but with the new Microsoft warranty... there's no reason for the PS3 owners to wait any longer. They can get a 360 now, and experience true next-gen gaming, instead of settling for the half-baked PS3. They can still use their PS3's of course, as blu-ray movie players. The PS3 sucks as a game platform, but it's GREAT for high-def movies.

RE: Good news for the PS3 owners
By leper on 7/6/2007 5:30:54 AM , Rating: 2
Is that you Peter Moore?

By Proteusza on 7/6/2007 6:41:21 AM , Rating: 3

Whatever else the PS3 may be, it isnt half baked.

RE: Good news for the PS3 owners
By crystal clear on 7/7/2007 8:19:38 PM , Rating: 2
Are you speaking on behalf of M.S? If so then=

Granted, the failure rate of 360's has been grossly exaggerated, but there indeed has been a problem.

Then why dont you come out openly & put the facts on the table.
What is the failure rate ? Honestly

Dont talk about PS3- Talk about the Xbox & its failure rate.

Why are you hiding behind those official Public Relations responses/statements.

Why do you have to wait till Daily Tech EXPOSES you & comes out with the real facts & figures !

This is not good news for PS3 owners- This is disturbing News for XBOX owners !

Do you need somebody to Expose you to enable you CONFESS

By crystal clear on 7/7/2007 8:24:52 PM , Rating: 2
Rember one Ex-President who insisted...

I did not have sex with that women !

Till it was too was all over for him.

Did you know about the intel Sause !
By crystal clear on 7/7/2007 7:51:45 PM , Rating: 2
TThe RROD has been the perennial thorn in the side of the Xbox 360.

Most had speculated that the problems related to Xbox 360s becoming afflicted with the dreaded RROD was because of lead-free solder joints on the GPU

If this is the real problem.then Buy the Intel Sause recipe !
Intel will oblige ofcourse for FEE !

By crystal clear on 7/7/2007 7:57:23 PM , Rating: 2
RE: California in my mind .......
By crystal clear on 5/23/07, Rating: 2
By crystal clear on 5/23/2007 1:53:31 PM , Rating: 2

The secret Intel Sauce-

Intel will use a tin/silver/copper alloy instead, though the exact ratios of each metal are unknown (Intel refers to this as its "secret sauce.")

RE: California in my mind .......
By crystal clear on 5/23/07, Rating: 2
By crystal clear on 5/23/2007 2:26:03 PM , Rating: 2

Is 3 Years long enough!!!!!!
By Lankym on 7/8/2007 11:37:28 AM , Rating: 2
Im just wondering if people believe that 3 years is long enough of a warranty. I mean how long do people expect there 360 to last.

Its about time that warrantys last much longer than a year and even longer than 3 years.

Its not as if they are cheap to buy..

RE: Is 3 Years long enough!!!!!!
By Timeless on 7/8/2007 5:38:30 PM , Rating: 2
I don't know about you, but I expect the consoles I buy to WORK. I don't expect my consoles to break down on me within a few years. I want to spend my time playing games, not waiting for a repaired console to come back. Warranties wouldn't be an issue if Microsoft actually did their homework and not field test their product on their customers. CONSOLES SHOULDN'T FAIL LIKE THIS!!! Nintendo got the idea. Sony's finally getting it. When will Microsoft get it?

By bkm32 on 7/6/2007 8:59:05 AM , Rating: 3
Everyone, who posted here needs to give mad props to DT. Even if the article wasn't exactly "scientific" or whatnot, DT scored big to help the consumer, and every X360 owner and soon-to-be owner owes DT a great big "thank you"!

Thanks, DT.

BTW, Gamespot, grilled Peter Moore prior to their announcement, and they referenced the DT article. This could be a curse or a blessing, but DT, you are officially on MS's radar.

Rumsfeldian to the extreme
By OxBow on 7/6/2007 9:24:16 AM , Rating: 1
"This is just one of those things that happens when it happens," said Microsoft entertainment and devices division president Robbie Bach.

RE: Rumsfeldian to the extreme
By TomZ on 7/7/2007 12:18:14 AM , Rating: 2
That quote was pulled out of context. It was answered in relation to a question about the timing relative to Sony's expected uncoming announcement about lowering the cost of the PS3, i.e., is this in response to the Sony news.

Just in time!
By Mopac on 7/5/2007 10:40:37 PM , Rating: 2
Better late then never. I have been reading for some time now the problems with Xbox 360 and the 3 flashing red lights. I have had mine for over a year and it seemed to be working fine (however it does get very hot and noisy at times). But I could not shake the feeling of impending doom about my console.

Well of course, just this Tuesday 3/7/2007 about 8pm tmy console froze while playing a DVD. I turned it off then back on again a baam! the dreaded three flashing lights.

Called Microsoft support they said I would have to send it in for repair. Since my warrant had expired I would have to pay $139 for the repair. I charged it to my credit card.

I get home today and check out DailyTech and see the news about Microsoft's change in warranty. I jump online to find MS has charged $99.00 to my credit card. I assume the will credit it back, but I can't get through to customer service due to unusually high volumes (go figure) :)....

By Josh7289 on 7/5/2007 11:54:03 PM , Rating: 2
Great news! :D

By casket on 7/6/2007 1:02:44 AM , Rating: 2
I had an origal 360... and got a RROD in February... and they sent me a new one for free. I was very pleased with the service.

Since heat has been mentioned. My old 360 got hot as hell... (hotter than my scientific atlanta cable box).

The replacement version was clearly a brand new box. It does not get above room temperature... even if it is on for 3 hours. I am very happy with the new box.

I think the 65 nm version will be even cooler, but I don't foresee any more problems.
Also, I got the hd-dvd add-on... inherently you must put this on top of the 360... and I would think most people put it on one side, hence covering up the ventilation holes.

ventilation holes
By casket on 7/6/2007 1:10:06 AM , Rating: 2
In Anand's first article on the 360... I remember him pointing out that half of the ventilation holes weren't fully punched. This was true in my x360 as well.

On the new box, over 95% of the ventilation holes are now punched all the way through.
If Microsoft would have read the Anand reviews/comments... it would be a billion dollars richer now. Someone deserves to be fired, if they haven't been already.

What Does the $1.1 Billion Cover?
By Tuor on 7/6/2007 5:09:17 AM , Rating: 2
I mean, aside from the obvious use in repairing bad units and the other costs (such as delivery) associated with it, I wonder if this figure includes other aspects. In particular, I wonder if this figure includes the cost in manpower and time associated with developing and deciding upon whatever re-engineering strategy they ended up deciding to use on the 360? Also, new (and probably more expensive) parts they are now using in their manufacturing process.

In short, I don't think this $1.1 Billion figure is solely about replacing damaged units with new re-engineered units, but may also include everything else that Microsoft put into fixing the problem.

You heard it here first
By jay401 on 7/6/2007 6:53:04 AM , Rating: 2
Oh yea baby!
By Misty Dingos on 7/6/2007 8:10:05 AM , Rating: 2
While I have not been following the Xbox 360 melt down from day one. I becam interested in the problems with the system when I read about the theoretical 33% failure rate, and well I posted a couple of comments.

1. It is crappy that a company would sell a product with a failure rate anywhere near 33%. Not much feed back there.

2. MS can't or would have a very hard time suing people that are writing articles critical of the failure rate. Even if the said articles are less than studiously researched. Holy crap you would have thought I said you can pee on the Popes shoes and go to heaven by the feed back I got.

I am just going to see if any of the people that jumped all over comment 2 will even show their heads today. I did do a happy dance when I heard that MS has decided to extend the warranty on the system. That is a great outcome for the consumer. And 1.5 billion is a lot of money even to a company that has 45 billion in revenues a year. POWER TO THE PLAYERS!

Well unless you play too much then you need to get your head examined, because you are obviously addicted.

I have to comment on this...
By Legionosh on 7/6/2007 10:07:56 AM , Rating: 2
..I don't know if I'd go as far to say that the 360 is a piece of crap. Apparently there ARE some design issues, but other than the hardware failings it IS a good game console.

(Yes I own a 360...and a Wii..and a PS3, so please no fanboy comments please)

I know it's almost impossible to overlook the RROD issues (the disc scratching issues seems to have been limited to a very specific time frame, and those have seemingly been resolved), but if the redesign can be done and the issues worked out (it doesn't seem like it would be THAT hard of a thing to figure out, since the MAIN culprit appears to to be HEAT, first and more intense heat, no more warped PCBs, no more solder problems, etc, etc.), then I think the console would actually be on much better ground from a public view standpoint.

Do I think this should be ignored? Of course not..apparently there IS SOME sort of issue that MS DESPERATELY needs to fix (and the warranty, while indeed a good step in the right direction, admittedly does not solve the problem).

The die shrink will definitely help matters I think, and maybe with a few other manufacturing tweaks, could put the failure rate in line with most other electronic devices. Maybe the die shrink along with the "new and improved" cooling unit (first seen on the Elites) will be enough..

(then again I have even heard things along the line that the solder itself is even partially to blame, so there are probably issue/problems we aren't even aware of).

Only time will tell what MS will do. The have spent on lot on the XBOX brand, so I think they need to try and fix their problems and save face with the buying public.

My two cents,

My Morning Exprience
By Zigazoid on 7/6/2007 11:20:43 AM , Rating: 2
My morning started of great when I first heard the news, until I read the fine print and realized that the extended warranty only covers the red ring of death. That is a good step in the right direction but leaves me in the dark.

My warranty ended 1 month ago, starting two weeks ago I get a Purple horitzontal line that scrolls through the screen. It's not a deal breaker but its pretty damn annoying. I tried a different T.V, new cables, resetting the XBOX 360's display, etc etc. bascially every option Tech Support e-mailed me. None of them work the line's still there and apparently its not going away.

So after 30 minutes on hold I get a live person at Microsofts techsupport, he gets all my information and informs me it will be $99.00 to fix my problem. However they're having system errors so he can't even process a repair order today, I have to call back. So their's an hour wasted. (Note: the actual customer service rep was very friendly and helpful and apologized as much as one could for me having to wait that long to talk to a person)

So bascially I pray for a red ring of death, why should I spent $100.00 to fix my issue if I can just play the odds and get it fixed for free. Given the track record it may only be a few more months before I get my red rings of death.

So while MS is helping out those who exprienced red ring of death errors, other issues related to their crappy hardware design still have to pay after their warranty is out.

Would I buy one?
By robinthakur on 7/6/2007 11:22:25 AM , Rating: 2
I think it speaks volumes that with all the PS3 exclusives now going to 360 (mainly, for me, VirtuaFighter 5) I still am extremely wary about buying a 360 *especially* now I know that its got a MAJOR design flaw, warranty or not. I think only those very sympathetic to Microsoft would envisage this announcement as a good thing as it taints the purchasing decision for everybody looking to buy one, and it makes MS look desperate, because let's face it, they must have known about this for considerably longer than us or DT, and the weight of invective directed at them in public must have reached critical mass. I certainly won't be buying one until the hardware issue is fixed, simple as. This has actually made the PS3 look attractive, which takes some doing...


$140 refund
By JAH on 7/6/2007 1:26:08 PM , Rating: 2
What's the process of getting the $140 back for those who already paid to have the RRoD issue fixed? I'm hoping it's the same process like they did for consoles manufactured before 2006, that is, you do nothing and MS will send you the check eventually.

By kilkennycat on 7/7/2007 12:25:34 PM , Rating: 2
ALL other failures are only covered by the current 1-year warranty....

Quote from 1UP interview with Peter Moore of MS, with regard to the 3-year warranty extension:-

" 1UP: I want to be specific. This only covers the red ring issue.

That's correct.

1UP: Personally, last week, the issue I ran into was my machine stopped playing some discs, but will play some others. This won't be covered under that, correct?

It's the red ring, which is a general hardware failure. You've got a one-year warranty, depending on when you got your box...

1UP: Mine was a launch one.

This is focused on a specific issue that we feel we haven't done a great job working with the consumer and that's what the focus is, yes "

The full article is here:-

My Comments: So when the internal DVD-drive begins to fail after a year due to chronic overheating by the CPU and GPU heatsinks jammed up against the case of the DVD-drive, better be prepared to pay the bucks for the repair. Or for any other Xbox360 failure that does not cause the RROD, thank Microsoft for their generous 1-YEAR warranty.

And, of course any console sent in exchange for a failed-one is just a patched-up one with the same design problems. There will be plenty of the current junk design to go around. So when MS finally updates the console to fix all the design issues, unless they change the product name (to say "Xbox360Platinum") , expect a very high statistical probability that any failed console of the new design, will be exchanged for one of the original (failed) design.
The Xbox360 Elite is no panacea... the extra heat-sink will get no air once the original non-user-accessible-for-cleaning CPU and GPU heatsinks fill up with air-borne crud.

If you are contemplating buying a Xbox360 any time in the future and MS have not updated the DESIGN for reliability plus at the same time changed the model name to something different from "Xbox360" or "Xbox360 Elite", I would strongly recommend taking out a long-term extended "no-questions-asked" "EXCHANGE-FOR-NEW" warranty. Assuming, of course whether any retailer or insurer would ever offer such a warranty, given the Xbox360 reliability history.

By Goty on 7/5/07, Rating: 0
RE: Awesome!
By Goty on 7/6/2007 4:16:37 PM , Rating: 1
Uh-oh, the fanboys got to my post!

Open XBOX360 platform
By nvalue on 7/5/2007 11:21:00 PM , Rating: 1
Microsoft is good for writing OS but not for making hardware. Why don't they open XBOX360 platform as a open standard, so that HP/DELL/IBM can help them to design a better machines just like IBM PC. Also, they can minimize the cost of doing R&D on hardware.

XBOX 360 warranty
By niknteen on 7/6/2007 12:29:26 AM , Rating: 1
okay some simple math for xbox owner??$1bil/$1.15 bill, cost of repairs $140.00 . this equates to an expected failure of some 8214285 machines out of 11.? million sold. now i kow they saud they will also cover cost of shipping so you can maybe drop 1million of the repair quota. somehow the thought of 7million out of 11.? sold = 33% is not sounding right to me. But then i dont and wont own an xbox after the dismal crap i was fooled into getting first time round. i have a few tech head friends who work on these poor things and they are talking a figure closer to 64% failure rate.? just passing on some thing i heard not my quote, but even the 33% ms are quoting is rather lousy when you think of the figures. Seems like to buy an xbox 360 is like going for a lucky dip.By the way, what the hell is 1bil to a company like ms? The idiots should have taken the time to test the product and fault find/fix before releasing to the market!! Oops sorry, they had to beat another company to the floor didnt they? and now they have how many potential dead machines? sounds like a case of "serves you right M.S."

oh man
By Coolman256 on 7/6/2007 3:13:58 AM , Rating: 1
I think several points need to be brought up. Just because MS charges 140$ to repair a typical RROD failure does not mean it will cost them that for their whole ~1B$ warranty extension allocation. For one, a lump sum of that will go out to refund people that were shafted and payed already. It'll be interesting to see how that pans out with the language of the new warranty terms (seems to only cover RROD). So then you have to consider... will they be just patch job fixing the issue (the 140$ fix - remember probably not cost them 140$ especially since they will be doing this service IN MASS), or will they try to fix it so that failure is not recurring... 3 year extension would allow for MULTIPLE failures per faulty machine and replacing the hardware may be beneficial to them. PLUS they can start selling the updated hardware. I think theres a lot of variables to this, but I think they will have quite a chunk of cash after refunding people for repairs, and they will do whatever is in their best interest that hopefully wont run over their budget for this extension. It's probably not likely that they'd do any drastic hardware replacement... They have to sell a huge stock of existing hardware that probably has a fairly high RROD rate (assuming the issue is the heat related one and has not been fixed)...
i guess I would suggest.. 65nm conversion with a heatsink with more sparsely placed fins and perhaps a fan upgrade.. wouldn't cost them THAT much of that chunk, and leave the existing (Im guessing perhaps better chips that operate more effectively at the stock xbox 360 clock rate) hardware go and replace it as it fails within the 3 years until all the existing hardware runs out of that 3 year envelope... Or i suppose they could pull existing inventory and replace...... but hey they probably make more money selling current hardware at a profit so it will further sustain their ability to replace it down the road... ok I'll stop throwing considerations out there, they're a huge company and will do some intensive research and determine the best course of action... perhaps a mixture of of replacement and patch job 'band-aid' repairs.

I dunno, but MS has been looking a whole lot less evil in my eyes, maybe ive just done drugs to the point of stupidity.. I havn't pitched in for vista yet, so i guess im not bitter about MS's 3 year worldwide cash collection, which I guess is reason #1 why they're evil (plus their software sucks full of bugs etc BS BS BS its like 99% of the install base and people write lots of shit code and target malware/virii at Windows, and a little bit of it having some flaws inherent of all of the included stuff in the OS).

so now everyone is happy?
By michal1980 on 7/5/2007 10:15:32 PM , Rating: 1
the software is good.

the hardware is such crappy junk that, mS was FORCED to extend the warrenty twice now. AND give people people their money back.

but its still a good system right?

the xbox 360 is like American cars of the 70's Lots of power, flair, look good. Die after 1-2 years.

Sure its cool, But in the end all you have is a well warrentied POS console (heck I have one too, and am just waiting till it dies).

rather then fix the problem, MS denies one exsits, until every store turns against them.

cosumters on messages boards have known for years how bad the hardware is.

and while this is good. Its like putting whipped cream on dog crap. Sweet on the outside, crappy on the inside.

The ps3 on the other hand has great hardware, but crappy software.

RE: so now everyone is happy?
By michal1980 on 7/5/07, Rating: -1
Still a piece of monkey crap
By xuimod on 7/5/07, Rating: -1
RE: Still a piece of monkey crap
By tehfire on 7/5/2007 9:49:30 PM , Rating: 2
`Evidence strongly suggests`


Some unconfirmed report from some people who didn't give their names isn't exactly what I'd call strong evidence...

RE: Still a piece of monkey crap
By xuimod on 7/5/2007 9:56:08 PM , Rating: 3
Still a piece of monkey crap.

By energy1man on 7/5/2007 10:56:29 PM , Rating: 3
They are setting aside up to 1.15 billion dollars for extending warranty service from one to three years. Don't know the cost to microsoft, but if it costs them $400 they are expecting about 2.9 million repairs on top of whatever warranty service they have paid for through year one. Out of 11.6 million units sold, that it is a fairly high defect rate.
I like my 360 have had since day one, no problems, knock on wood. Still does not hurt to have the extra warranty.

"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA

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