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Nearly one in every three Xbox 360 consoles fail, according to retailer reports

By several metrics, the Xbox 360 is the most successful console so far of this generation. Despite the startling pace of the Wii, the Xbox 360 still has the most consoles sold worldwide and the longest list of games and exclusives. For a gamer looking for online-enabled high-definition gaming today, the Xbox 360 appears to satisfy those needs.

One often overlooked factor when considering a console purchase is reliability, an area that is apparently where the Xbox 360 falls short. Anecdotal evidence is heavily pointing to Microsoft’s latest console as being significantly more prone to failure than what consumers are accustomed to.

Microsoft has said before that its Xbox 360 failure rate falls within three to five percent, what it believes to be well within industry standards. Internet reports from Xbox 360 owners, however, suggest that the failure rate is much higher than that.

In an effort to gain a more accurate picture of Xbox 360 failure rate, DailyTech decided to poll retail outlets that sell the Xbox 360 and with it the option to purchase an in-store extended warranty. Out of all Xbox 360 extended warranties sold, we wanted to know how many were claimed by consumers with defective consoles, thus giving us a more accurate failures percentage.

After contacting several retailers from various regions in North America, the responses were unanimous: the Xbox 360 is the least reliable gaming console in recent history. Current EB Games or GameStop employees who offered information did so under strict anonymity, as it is against company policy to reveal such information to the public. Furthermore, our sources confirmed that EB Games revised its Canadian warranty policies during early 2007 for consoles solely due to the failure rate of the Xbox 360.

EB Games held conference calls for its Canadian stores informing them of the new policy changes and revealing alarming failure rates of the Xbox 360. “The real numbers were between 30 to 33 percent,” said former EB Games employee Matthieu G., adding that failure rate was even greater for launch consoles. “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.”

Interestingly, Microsoft has acknowledged that the initial batch of Xbox 360 consoles made during the launch window suffer from below average reliability. In response to an overwhelming defect rate of launch consoles, Microsoft agreed to repair all machines manufactured in 2005 free of charge, and issue a refund for those who already paid for repairs of launch units up until January 1, 2006.

The three flashing red lights – commonly referred to in gaming communities as the “Red Ring of Death” – is a sign of an Xbox 360 hardware failure. The sign is apparently common enough that Microsoft has added an option to its 1-800-4MY-XBOX support line that names “three flashing red lights” specifically.

As a result of the high failure rate of the Xbox 360, EB Games corporate nearly doubled the prices of its one-year, over-the-counter warranty. While the previous warranty would give a customer a brand new console in exchange for the broken one, the new policy now states that the customer will receive a refurbished console instead. The move was made because it was becoming too costly for the retailer to give the customer a brand-new machine, which still carries a store cost close to the MSRP. The price increase and policy change wasn’t exclusive to only the Xbox 360, however, as it also applies to all other Sony and Nintendo consoles sold.

The failure rate nearing a third of all Xbox 360 consoles was found at other retailers too. A Best Buy customer service department manager, who wished to remain unnamed, said that failure rates for the console were “between a quarter to a third” of all units sold.

“We see a ton of [Xbox 360s] come back all the time. We strongly push our customers to buy our service plans no matter what they buy, but it is especially important for them with the Xbox 360,” said the manager. “It’s a lucky thing for us that Microsoft extended the factory warranty to one year, because we were having a hell of a time dealing with the launch units. Now we don’t have to deal with those broken [Xbox 360s] until their second year, for those who have purchased the two year plans.”

In late 2006, Microsoft boosted the warranty of all Xbox 360 consoles to one year, up from 90-days previously. For gamers who are out of warranty, however, a replacement or repair will cost Xbox 360 customers $140.

When compared against other systems, the Xbox 360 is failing at higher rates than its current competitors and predecessors. Former EB Games worker Matthieu G. said that the failure rates for all other consoles were not high enough for the retailer to consider revising its policies, and guesses that most other console systems have a failure rate of less than one percent, including the PlayStation 3. Another EB Games manager, when asked if the store warranty was worth it, conceded that in the hundreds of Wii units sold at that location thus far, zero have come back as defective.

Despite the overwhelming evidence that the Xbox 360 is a relatively unreliable games machine, Microsoft officials refuse to comment on its failure rate. Peter Moore, VP of Microsoft’s entertainment division, said to the Mercury News, “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. I’m not going to comment on individual failure rates because I’m shipping in 36 countries and it’s a complex business.”

Similar questions regarding the Xbox 360 hardware met with the man responsible for the design of the console, Todd Holmdahl. He too sidestepped the issue with the Mercury News, saying, “I would say we don’t have a high defect rate. The vast majority of people are really excited about their product, and that we are targeting profitability for next year.”

Asked differently about whether or not the Xbox 360 falls into the ‘normal’ three to five percent return rate, Holmdahl said, “We don’t disclose the actual number,” and “We don’t comment on that.”

No piece of technology, no matter how well designed, should be expected to completely free of failure. The key metric is whether or not a product falls within industry standards of acceptable failure rates – and from findings based off retailer-supported warranty returns, the actual rate of failures could be six to ten times greater than what Microsoft is letting on.

Regardless of what the actual failure rate is, there is consumer perception that the Xbox 360 is a less reliable machine than its competitors. That fact alone should encourage Microsoft to do more than just avoid all comments on failures and only preach on the wonderful experience of its consumer base.

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RE: Curious
By Marcus Yam on 7/2/2007 9:12:09 AM , Rating: 5
There wasn't as much data on the PS3 or Wii, but even if there was, it would be unfair to compare systems that have been on the market a year less than the Xbox 360.

The Xbox 360 has been around longer, and thus you would expect a larger pile of broken machines. In fact, that's probably true of anything. (To steal a like from Fight Club, on a long enough timeline, the survival rate for everything drops to zero.)

The fact here is that regardless of how the PS3 and Wii are doing, a 33 percent failure rate is unacceptable for any product.

RE: Curious
By JoeBanana on 7/2/2007 10:02:54 AM , Rating: 2
You say it's got tons of consoles out there so more should broke. It's relative estimate. One third of all. And the fact is they should improve the reliability in the meanwhile. There is no data in media on PS3 and Wii because people who bought Xbox are complaining and that got the media attention.

RE: Curious
By othercents on 7/2/2007 10:33:35 AM , Rating: 3
Having complaints on the Xbox360 does not keep PS3 and Wii users from complaining if they have a problem. I have seen a few reviews where there were cases where Wiis were DOA or broke within the first month, but nothing in mass like the Xbox360.

The only difference right now is all the PS3s and Wiis are under manufacturer warranty. The users can quickly send the console back and get a new console from the manufacture. However a good portion of Xbox360s are not under warranty anymore and they are either relying on extended warranties or having to pay to get them fixed. This definitely causes people to voice their opinions more often.


RE: Curious
By hadifa on 7/2/2007 9:05:51 PM , Rating: 2
You say it's got tons of consoles out there so more should broke. It's relative estimate. One third of all.

No, He says 360s were around for longer and so there is a higher chance of failure and thus the quote from Fight Club.

RE: Curious
By carl0ski on 7/2/07, Rating: -1
RE: Curious
By XesBOX on 7/4/2007 5:17:02 PM , Rating: 1
Nice work on that math Einstein, but we're not talking about an average over total years. We're talking about what's happening RIGHT NOW, and what the past few months have looked like in relation to the average failure rates of other products over the same time frame. Here, I'll help you with something more basic:

1000 Units are sold.. Over the course of a month, 50 break, and another 1000 are sold. Over the course of the next month, 100 break; 50 from the first batch, 50 from the second. The month after that, 150 break, 50 from the first, 50 from the second, 50 from the third. See where I'm going here?

If I remember right, system failure rates are calculated by the total number of devices divided by the number of returns in that time frame, and not total failures (as you've given in your example.)

Additionally, if Toshiba, LG, and Samsung only sold a number of their products equal to the 360's to date there wouldn't be a spread. I mean, c'mon, they don't even compare when speaking about world-wide failure rates. Not only that but the technology of TV's and DVD players is slightly less complicated. I mean, how many of these hardware failures is on account of the DVD player in the 360? And don't think the rings have anything to do with defective hardware, it's just a shitty player (or possibly a shitty factory somewhere in the Himalaya's.)

RE: Curious
By crystal clear on 7/2/07, Rating: -1
RE: Curious
By Oregonian2 on 7/2/2007 2:04:57 PM , Rating: 2
Sigh... don't you think that Microsoft knows this and is doing their damnest to fix it? Every return a company gets is money down the toilet, their money. Think they don't care about money? Even more so for a product that depends upon secondary (game) sales to get any profit. They want to have zero returns if they can swing it and keep the sales price competitive. For warranty returns the costs are immediate and significant, for post-warranty the costs are indirect.

IOW - they knew it's a serious problem before anybody else, and are undoubtedly trying to fix things ASAP. Now, of course they'd be trying to minimize impact on sales so they'd be trying to fix things as quietly as they can. Which is the "problem" in articles like this one.

P.S. - And note that the store's policy changed for the PS3 and Nintendo stuff too, not just the 360.

RE: Curious
By hozelda on 7/4/2007 9:57:12 AM , Rating: 1
>> Think they don't care about money? Even more so for a product that depends upon secondary (game) sales to get any profit.

I don't really disagree with what you said; however, Microsoft REALLY cares about money. They have a history of throwing uncooked products out the door to take marketshare away from competitors, which is the first step in eliminating competition, which provides a direct expressway to monopoly control over partners and suppliers of games and over customers, which means control over pricing. There is a real advantage to them with this situation (aside from the disadvantages to them). That is that many people that get hooked on the games or think it is too late to turn back or have some sort of loyalty to Microsoft and want to give them "one more chance" will be funding MS's short-sightedness. You also have Windows and Microsoft Office users (among others) funding the XBox alpha product delivery. People that have dollars to spend will get MS through this difficult time as they hurl their money in Microsoft's direction over and over. If XBox are breaking this fast, expect to continue upgrading XBox's for years into the future. Ka-ching.

>> P.S. - And note that the store's policy changed for the PS3 and Nintendo stuff too, not just the 360.

It should be clear that these two other game systems are no where as unreliable as the XBox, so why would this be done then? Here is my guess:

This retailer is counting on XBox games sales more than on sales from other consoles (maybe they even get a larger cut from XBox sales or maybe they don't get a good return policy on the games). If they only raise the insurance cost on XBox's it will drive people away and help degrade the brand. This will directly affect the bottom line if they can't move the XBox games inventory as expected.

And I would not be surprised to find out that Microsoft actually has contract terms that forbid the retailers from offering a discriminating extended service contract for the XBox. This may not be the case, but I wouldn't be surprised. Then again, with MS not having monopoly control here, they might have to fall back to carrot offerings with little stick.

RE: Curious
By alifbaa on 7/2/2007 12:07:27 PM , Rating: 2
Mr. Yam, I just wanted to thank you for doing this work. It's really surprising to me that the mainstream media hasn't looked into this more given how ubiquitous the 360 is within the US. I've been waiting on the 360 to get its reliability issues figured out since it was first introduced. Based on your reporting, it looks like I need to continue waiting.

At this rate, the PS3 is looking better and better. Maybe they'll make good on the rumors and reduce the price soon!

Thanks again.

RE: Curious
By encryptkeeper on 7/2/07, Rating: 0
RE: Curious
By geddarkstorm on 7/3/2007 3:33:02 PM , Rating: 2
Since this was measured using returns on retailer warranties, then what consoles that went through Microsoft were not captured in the total. Which means this is a random sample of the population and therefore representative (what's true for the retailers, we can reasonably assume, is true for any direct interactions with Microsoft. This is, of course, one of the basic assumptions of all statistics). The time frame of these failures are within the context of the warranty spans. Therefore, comparing the same warranty spans across different products is the only true apples to apples comparison you can do. If the retailers say they are getting loads of Xbox's back and not so many Wii's or PS3's within the same warranty time span, then that is the raw observed data around which all hypotheses and deductions must be made (assuming the data is factual, which we have no reason to doubt).

Since this is what the retailers are saying based on people who bought warranties (and many I'm sure didn't), then it seems to be an incredibly big issue that needs to be addressed. Microsoft itself sends back refurbished units, so there wouldn't be 2 million units sitting around in a dump somewhere, although there could very well be. There's no way for us to really know what's going on if Microsoft keeps all the data hidden.

I suppose that's another thing--if the failures were within industry standards, wouldn't Microsoft release its data to prove that and dispel these "myths" which are hurting its profits? Because it's unwilling to give out such innocuous data suggests strongly that the failure rates are indeed outside of industry standards.

RE: Curious
By Christopher1 on 7/2/2007 10:02:32 PM , Rating: 3
Excuse me, but even for a brand-new technology product..... 33% is a *bleeping* high failure rate, at best..... AT BEST!

No product that was supposedly tested for as long as the XBox360 by Microsoft should have that high of a rate of failure. I could understand 3-5%.... that is median for a new product on the market (even Packard Bell, the crap-line of PC's, only had a 10% failure rate with new models).

RE: Curious
By pammy ut on 7/2/07, Rating: 0
RE: Curious
By Marcus Yam on 7/3/2007 12:12:35 AM , Rating: 5
My sources may be anonymous to you, but they aren't to me. The fact is that, while I would have loved to attached names and mugshots to everyone who volunteered information to me, it would have very likely gotten them fired.

I would strongly admire someone who would put their job on the line in an effort to expose the truth, but I'm not going to hold it against anyone who is just trying to make a living.

RE: Curious
By tarrbot on 7/4/2007 2:21:34 AM , Rating: 1
The issue is not so much your sources but more your methodology and process.

From what I can tell you've done no better than call up every Wendy's and ask them what's the best selling burger they have rather than get the numbers from Wendy's International (the corporate entity). Or put another way, you asked all of the deskside technicians what the problem was as a whole from a network standpoint. Here's a clue: the techs are the wrong people to ask bird's-eye view questions such as this.

Not only has the process been thought out incorrectly, but you fail to acknowledge the methodology you used in gathering this information. No one knows if you attempted to use a predetermined questionairre that the sources responded to or if you made questions up on the fly. No one even knows if you were honest about your profession, let alone your motives.

Now, even all of that is bad enough, but you didn't even hazard a guess at other retailers. What you've effectively done is to take a bunch of biased clerks/salesmen and ask them about their "perceived" notions of reliability. Did you ask for any detailed documentation or otherwise use anything more than someone's recollection? It doesn't appear so.

What's worse is that Daily Tech is running this op-ed piece you wrote on the front page as if it's truly hard-hitting investigative journalism.

And what methodology did you use in determining if a 360 was returned because the product was physically damaged due to incompetence at the store level? What about returns due to the vendor selling an opened system as new? (I use these examples because I personally have seen this happen with 360s).

Oh wait. You didn't do that, did you? You relied upon the word-of-mouth banterings of salesmen and recollections of store managers.

You have no real hard-hitting numbers, do you? Or are you counting the numbers you wrote down from someone else's memory as hard numbers?

I hate to say this Mr. Yam, but this honestly is one of the worst researched articles I've ever seen.

In summation, your article is admittedly anecdotal and yet you've portrayed it as authoritative and well-researched. I believe you know it neither to be well-researched nor authoritative. Your methodology is lackluster and your facts spurious.

It's garbage, sir.

RE: Curious
By Ronson on 7/4/2007 4:46:03 AM , Rating: 2
Yeah it's most probably inaccurate but hey if my friend's X-Box 360, Wii, ipod or iphone blew up in less than a year, do you think I'll buy any that failed?

RE: Curious
By Ronson on 7/4/2007 4:48:47 AM , Rating: 2
Oh yeah on this note, I no longer buy or recommend Western Digital harddisk after mine and 2 of my friend's HDD died in less than 2 years.

RE: Curious
By BMFPitt on 7/4/2007 9:36:55 AM , Rating: 2
I've actually found a good rule of thumb to be: Buy hard drives from the company where they had bad failure rates 6-12 months ago. They will have gotten their act together.

Whatever company seems to be very reliable right now will start getting lazy and their drives will fail a few years down the line.

Seems to be a rotation of sorts between WD, Seagate (used to be IBM), and Maxtor.

RE: Curious
By rushfan2006 on 7/9/2007 10:58:08 AM , Rating: 1
I tend to agree with Tarrbot, though I will not say it was garbage.

Before I go further if anyone looking for a biased slant for any console, you should know I play no consoles anymore, I own a Xbox that has done little more than collected dust in between the times when my nephews visit (about 3-4 times a year) then they'll play it.

I'm a PC gamer, have been and will always be - until/unless they suddenly stop making PC games or PC gaming hardware.

Bottomline : I don't give a shit which console has the black eye or not.

Anyway, I'm skeptical. And to just take the article posted as full fact and nothing but would be a bit ridiculous to me and a tad naive.

The most credible parts to me are the few spots where the post was named from another magazine and/or website article and the link was provided.

Beyond that how does anyone know its not just some whipped up article from one person's viewpoint. where's the reassurance its not just in the spirit of a blog, done with a biased slant (either for or against - you pick).

This all said, personally I do think the claim is somewhat valid of xbox 360 failure rates. Because of four people I know personally who owns them two of them had issues since purchase (both since got either repairs done or a replacement), the third person has had no issues with his 360 and the fourth doesn't really play it that much.

RE: Curious
By bob4432 on 7/3/2007 5:02:55 AM , Rating: 2
if you think these numbers are out of line, just go to any 360 scene website and you will find there are a lot of them showing up w/ the rrod.

RE: Curious
By Black Rainbow on 7/4/2007 6:13:14 AM , Rating: 2
You can make this as fair as you want. If you use absolute numbers, the 360 would always be at the bottom. However the fail rate could still be lower than those of others. I would say that the longer a product has been on the market, the lower the failure rate should be, since the manufacturer has had more time to refine its product.

RE: Curious
By chick0n on 7/5/07, Rating: -1
RE: Curious
By cuteshox on 7/5/2007 4:35:18 PM , Rating: 2
Yeah, I've left my PS3 for over a week now running Folding@home and it's still doing fine.

"There's no chance that the iPhone is going to get any significant market share. No chance." -- Microsoft CEO Steve Ballmer

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