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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 BMFPitt on 7/2/2007 4:04:27 PM , Rating: 2
I disagree. While the X-Box 360 is more powerful for the money, you can buy an equivelant PC for about $200 more, self-built mind you, and have a much more versatile experience
Just like I said, except without the caveat that in 5 years XBox360/PS3/Wii will still play the latest games made for their respective platforms. Find me a 5 year old PC that will run a game made in 2007. It'll cost at least $200-300 to bring it up to minimum standards, coming out to just about double the cost of a console for the use period (just as I said.)
With that you can "easily plug it into the TV and play" via the S-Video/component out. You can also edit music/vdeos/pictures, run a wide variety of games, use heavy-footprint office-suites, and the list goes on.
Not on my TV. There has been a massive improvement with the nVidia drivers over the last 2-3 years as far as TV connectivity, but I still lose about 5% of my screen space (and I kind of need that Start Menu) when I plug it into my TV.
Essentially, aside from multiple players on one "unit", there is nothing a console can do that a PC cannot.
It can remain a uniform development platform for a long period of time.
P.S. I don't know if the 360 does HD/Blu-Ray discs like the PS3, but if it does then that is one thing my "equivelant PC" could not do.
It needs a $200 add-on. The same one works on PCs, and is the cheapest HD-DVD player available right now.

RE: Boring
By nemrod on 7/2/2007 4:59:26 PM , Rating: 2
Just like I said, except without the caveat that in 5 years XBox360/PS3/Wii will still play the latest games made for their respective platforms. Find me a 5 year old PC that will run a game made in 2007. It'll cost at least $200-300 to bring it up to minimum standards, coming out to just about double the cost of a console for the use period (just as I said.)

Apparently, the most difficult would be to find a 5 years old xbox360... If you have to buy a new one every year, this will cost much more than pc...

RE: Boring
By leexgx on 7/2/2007 5:21:49 PM , Rating: 2
i have to agree with nemrod post i guess at best you probly have to buy an new Xbox 360 every 2 yrs (unless you got 2yr ext on it)

after the first year its Pot luck when it fail and its not If its When it will do the Red ring of death

RE: Boring
By emboss on 7/3/2007 1:21:47 AM , Rating: 2
Just like I said, except without the caveat that in 5 years XBox360/PS3/Wii will still play the latest games made for their respective platforms. Find me a 5 year old PC that will run a game made in 2007.

Lots of PCs will if you turn the settings down - which is effectively what is being forced on a console.

The graphics on a 5 year old console will look terrible compared to current games on current PC's, but probably prety close to the PC games with the settings cranked down enough to run on a 5 year old system.

RE: Boring
By BMFPitt on 7/3/2007 11:13:08 AM , Rating: 2
My secondary computer dates to mid 2003, so around 4 years old right now. Athlon 2600, 512MB (later 1GB), 40GB HDD (later added 250GB), nVidia 5600GT (later 6600 GT), and a 20" CRT. Paid around $900 at the time, added about $400 over the years. In the interest of fairness, we'll exclude the cost of the monitor and the extra HDD since they wouldn't be needed for a console, which brings the cost of ownership to ~$1000. That was for a service life of about 3 years (and I would be due for another graphics card about now if it was still my main box.)

We all agree that at best, a console in its prime is no better than equal the performance of a PC, but for any realistic assessment of cost vs. performance for a gaming-only machine, the console is the better value. Also consider that the vast majority of people are not DT readers, and the thought of opening up their PC case terrifies them.

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