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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: Assemble them at home-Made in USA !
By masher2 on 7/2/2007 11:42:57 AM , Rating: 4
> "Summary- Americans make it better than the countries you mentioned..."

I'll take Japanese consumer electronics over American any day of the week, and twice on Sunday.

RE: Assemble them at home-Made in USA !
By theapparition on 7/2/2007 12:33:17 PM , Rating: 2
I'd probably take American.....that's only if there was any consumer electronics made in America. But since there isn't..........

RE: Assemble them at home-Made in USA !
By crystal clear on 7/2/07, Rating: -1
RE: Assemble them at home-Made in USA !
By shabby on 7/2/2007 2:27:02 PM , Rating: 1
Have you ever worked as an assembler/tester in an electronics manufacturing company in north america? Are the wages good? Is the employee morale good? I dont think so.
I've worked in celestica before, and thats where some of the xbox 360's are being produced. I could tell you the employees are paid zilch and could care less about the product.

North america is so high on profit they will cut costs on quality and employee wages. How else will you keep your shareholders happy?

By Jerricho24 on 7/3/2007 10:37:56 AM , Rating: 2
this is indeed the case "pay penuts, you'll get monkeys" it doesn't strike me as odd that the low paid worker doesn't respect the product they manufacture nore the customer that buys it and you can guese there attidude toward the suited up excec's and there flash black Merc's that never get seen on the factory flore. I finde that hands on managers have a much greater awaerness of the mood and can head of product failures simply by asking the guy at his/her workstation "can you see any problems with this?" worker replies "yea its gonna get hot" worker savey exec say's "hay thanks I'll look into that" end result, the worker thinks he has valid imput toward the company and product, he feels his opinion was worth something and takes greater pride in all aspects of his/her work. The manager/exec has with vary minimal work improved production and therefore profit, the share holder worker and exec are all better of and the consumer gets a better more reliable product to me this is a nobrainer unfortunatly this is not the case in the world at the moment,a strange missguided facisme at the top tear has gummed up the works. IMO anyway

RE: Assemble them at home-Made in USA !
By xbox360defective on 7/4/2007 1:11:58 AM , Rating: 2
I have to comment, I am sorry.

First I have to say this.
I love America, born and raised here.
Generally speaking, Americans are lazy, and could care less about doing a good job. Today, most importan though on the minds of workers is Getting Paid and then getting the hell away from the jobsite.

I have tried to hire many workers for many things, and I have to go behind them and make sure they do their job.

In construction we have what is known as Tolerance. That is in more simpler terms, the amount of being off the mark that is allowed. Americans do not even know where the mark is! All they care about is getting paid and getting home.
I am not happy, nor do I take joy or pride in saying that, but I can give you so many examples that I do not have room here... How may times have you ordered food at a fast food place, only to have your simple order wrong? I rest my case. If the 360 was manufactured in some other country, I do not know which, but for instance, possibly Japan, I'll bet pride in workmanship would not allow them to go public with it until it was proven reliable.

By Pythias on 7/9/2007 9:01:32 AM , Rating: 2
How may times have you ordered food at a fast food place, only to have your simple order wrong?

Hundreds of times. Usually delivered or prepared by someone who didn't or wouldn't speak English.

By samir80 on 7/2/2007 3:15:41 PM , Rating: 1
Just to inform you that TATA no longer manufactures for mercedes in India for quite a few years now, i do think there is difference in quality of the cars produced but i dont think you take into account that every manufacturing plant caters to specific geographical area, and cost of production does come into play because of various regulatory provisions. I personally dont think that mercedes would allow such a inferior product into the market(to the extent you suggested).

P.S. if you are wondering i am from Mumbai, India

By PrimarchLion on 7/2/2007 5:54:32 PM , Rating: 1
Sony televisions are assembled in Westmoreland County, Pennsylvania. Get a job there and you get like a 35% discount. I worked in quality control but I didn't purchase a television while I was there (stupid me). Now I can see all the dead/lit pixels and other defects in any display I own. YAY!

RE: Assemble them at home-Made in USA !
By Sebec on 7/2/2007 2:43:54 PM , Rating: 1
I would too, although interestingly, a lot of Japanese electronics are also made outside of Japan. A few examples, my PS2 and Wii were both made in China. I recently bought a JVC/Victor portable mp3 player made for the Japanese market (not sold in US), and that was made in Malaysia. Thinking back, I remember my original NES said "Made in Japan."

By bkm32 on 7/3/2007 3:19:24 PM , Rating: 2
Some PS3s are made in S. Korea along with some Bravia LCD TVs

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