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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: Boring
By spluurfg on 7/2/2007 9:49:56 AM , Rating: 5
Uh... If we can't deal with what exactly? High failure rates on products? Microsoft doesn't exactly warn the consumer that there is a high rate of failure on the Xbox 360 (in fact, they refuse to disclose this), so how is the consumer supposed to know what they are getting into? If I pay money for a product, I expect that it will work, or that the company will take the necessary steps to replace it.

Im just an average 28 yr old who is getting tired of complaining about each product out there. We know they have problems, we've known this for a long time. For all those who bought 1st gen systems, well you should have known what you were getting before hand. We dont buy 1st gen electronics in anything and not expect problems.

Nobody forces you to read other people's problems with their purchases, and this sort of journalism is interesting not just from a hardware perspective, but it is also revealing about MS as a company. Besides, the XBOX 360 is their second generation console...

RE: Boring
By mdogs444 on 7/2/2007 10:27:27 AM , Rating: 3
What im referring to - specifically in the 360 case - is that its problems: Red ring of death, refurbs being sent back, warranty issues, etc have been out in the media for quite some time - blogs, forums, the news, etc. Its no secret that the system is having issues, worldwide. I feel bad for the people who dont research a product before they buy it.

The 360 may be they 2nd console, but its not technically a 2nd gen or revision. Its all new hardware, software, etc. Nothing about the 360 is the same as the old Xbox.

When i said about people buying first gen, i was referring to buying the first revision of the console, being sold when it first came out. No one would have been able to know it had issues, and those are the people who got majorly screwed.

Since then, the issues have been widely known, and those who choose to purchase the product do so knowing that something COULD occur to it.

No where in my post did i defend MS, Sony, or any other manufacturer for their poor business ethics. But in today's age, a company would never disclose that there is something wrong w/ what they are trying to sell. Its just common sense.

So to counter that from a buyers perspective, we cannot just buy things and expect someone to fix if it breaks. We must do our due diligence and research what we are buying - to minimize the possibility of problems down the road.

This goes for more than just games, think of it as it pertains to cars. Wouldn't you do a great deal of research into the quality of a car before you purchase?

RE: Boring
By UppityMatt on 7/2/2007 12:05:44 PM , Rating: 3
I think the main problem with your post is that you turned a piece of investigative journalism into some rant about not buying the products of the companies.
"If you cannot deal with it, then dont buy it."

Then you go on to say

"This goes for more than just games, think of it as it pertains to cars. Wouldn't you do a great deal of research into the quality of a car before you purchase?"

What do you think this entire article is about??? its informing the public about a high defect rate so they are aware of issues. Why do you even post here?

RE: Boring
By mdogs444 on 7/2/2007 12:31:45 PM , Rating: 2
The article is throwing out numbers & figures (accurate or not, we dont know), but they aren't telling us anyhting we dont know - regardless of what MS tells us. You hear stories of someone on their 11th 360, others who have friends in which 5 out of 6 have broken, etc. We know the defect rate is extremely high (1/3rd i think may be exaggerating though).

RE: Boring
By spluurfg on 7/2/2007 7:11:28 PM , Rating: 2
I suppose I can see your point that it's always buyer beware, but not everybody expects such high failure rates from such 'reputable' companies. Sure, there's always the 'you should have googled it' answer, and maybe we've heard enough of it, but I think this kind of investigative journalism is very worthwhile to get the message across. It doesn't bash, and it doesn't interpret too much -- learning about failure rates from retailers seems pretty reasonable.

The only thing I can question in the study is whether consumers with an extended warranty would have a predisposition towards claiming faults that were either user error or fairly minor... though even with a fairly generous margin of error, the failure rate still seems very high.

RE: Boring
By One43637 on 7/2/2007 2:40:02 PM , Rating: 3
^^ my sentiments exactly.

On a related note, my 360 failed on me this past Saturday. Well ventilated, not enclosed, and it wasn't even a hot day when it happened.

The rep said my 1 year expired on June 24th. That's just great manufacturing there. 1 year and 6 days and it just dies.

RE: Boring
By leexgx on 7/2/2007 4:49:08 PM , Rating: 2
i guess every one should just brake there xbox 2-4 weeks before there 1yr runs out just to make sure thay get an replacement before it turns into an Fujtisu hard drive (TIME/TINY computers used them and thay would have 80% chance of it failing after 1yr thay never failed in warranty) problem with Xbox 360 its Very random there is no time line to when it fail you cant prediect whe its going to fail

the Xbox 360 is the Most unreliable console Ever made and the EU/US (or what ever corp deals with it) should Fine/tell them to fix the Xbox 360 as it does not Fall under norm Failed hardware use and an free replace ment should happen

what makes the Xbox fail any way ? is the heat-sink bending the board Overheating is not always the problem as users posting Red Ring Of Death (M$ need to add that to there Automated service line i have tryed ;) ) when its cooled as well thay still seem to fail

RE: Boring
By TSS on 7/2/2007 5:22:58 PM , Rating: 2
my best guess would be that it's microsoft. might sound like microsoft bashing but it isn't (though i'm definatly not a fan of MS).

MS is a software compagny, first and foremost. they started with an operating system, build a few applications for that system, eventually went over to game code... all fine... and then they design and build a console. now, ms is smart enoguh to hire some good personell (god knows they have the money for it) but you can't buy experience.

nintendo has been making consoles for decades now (with enough failures along the road to learn) while sony has been very active in consumer electronics. MS does nothing hardware orientated or very little in any case. they can program for it, but building it is a different matter. which we all saw with the first xbox which also crashed alot during the first week it was launched. and those where generic components, these are more specialized. that and even in the software field MS isn't exactly known for their reliability.

it's just the way MS does buisness, lie and hope the majority of consumers don't care enough to stop buying their products.

"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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