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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: Crap Yellow Journalism
By Misty Dingos on 7/3/2007 8:22:26 AM , Rating: 4
Libel: a written or oral defamatory statement or representation that conveys an unjustly unfavorable impression

Anecdotal: based on or consisting of reports or observations of usually unscientific observers

Now that we have defined libel and anecdotal you can now tell us how they apply here. While the evidence against MS is purely anecdotal it appears damning. If the failure rate of electronic equipment of a similar nature is used as comparison then it is even more damning.

Annual failure rates for PCs are about 7% in the first year of ownership.

You have to prove libel in court. If MS drags DT into court over this then they will have to PROVE that their Xbox 360 has a failure rate that is within the normal range of failure for personal gaming hardware. Considering that the typical gaming PC is more complicated than the 360 one would expect the Xbox to be more reliable.

A failure rate of 5% to 7% could then be expected then. If that were the case I think it would be hard for DT to find enough evidence, anecdotal or otherwise, to show a 30% failure rate for the Xbox 360.

I will close this with a simple question. There is one company that can tell you today what the failure rate for the Xbox 360 is today. And that company is Microsoft. If they can prove a reasonable failure rate why haven’t they?

RE: Crap Yellow Journalism
By Jerricho24 on 7/3/2007 10:11:35 AM , Rating: 2
I would have thought under freedom of Info act, that it would be easy to get actual figures from MS as that it is in the public intrest. I am unsure that MS would have a leg to stand on in attempting to block this request in a court if you(DT) had your credable anonymous source's to backup such claims. To maintain the source anonymity a request for closed session possibly?
As for nearly a third of a product being faulty, I would think a "national recall" wouldn't be alot to ask if the Nations that allow public release of said faild product had some form of consumer protection. If it had been a motor vehicle it would be front page, or a building contractor they would lose there builders permit. Sadly most countries consumer protection puts the onous on the underfunded consumer rather than the profit hungry corp'
In my game a reject rat of 2% is JUST exceptable, I like to keep mine below .5% the cost of the reject rate is caculated into the overall fee charged before production is even in the picture, anything less than the unwanted 2% reject rate is "cream"

RE: Crap Yellow Journalism
By Misty Dingos on 7/3/2007 11:31:05 AM , Rating: 2
I could be wrong but I do not think that a private company can be compelled to report failure rates for products that do not directly impact life, health, or safety of the consumer. Also I do not think the Freedom Of Information Act applies only to government and the US Federal government at that.

RE: Crap Yellow Journalism
By tarrbot on 7/3/07, Rating: -1
RE: Crap Yellow Journalism
By tarrbot on 7/4/07, Rating: 0
RE: Crap Yellow Journalism
By bkm32 on 7/4/2007 9:13:23 AM , Rating: 2
Give credit where credit is due. Impressive rebuttle. Winner, set, and match.

Major pwnage returned.

RE: Crap Yellow Journalism
By hozelda on 7/4/2007 11:36:44 AM , Rating: 3
>> 2) it's got defamatory statements

Could you be specific. The author explains the procedure and how the conclusions were arrived. At most it is suggested that the failure rate of all XBox's is bad based on an unscientific polling where, if witnesses are to be believed, the failure rate of such a sample is quite high. Also, the article notes that Microsoft has said in the past that its failure rate is a value in the range of 5%. Other representatives have avoided the issue altogether in public.

What I think is that the rate is very bad and Microsoft would be in trouble for misleading/ lying to the public. Not only are we talking about fines for Microsoft, followed by potentially many lawsuits, but it would be out in the open (especially after discovery) that Microsoft is producing hardware that is as alpha and immature as some of the software it produces [like Vista].

DT was just calling Microsoft on their bluff. Microsoft should not be lying in public; it comes back to bite you.

>> So, there is no burden of proof beyond that in a libel case. MS would not have to prove the failure rate is x%. ....
>> So, DT is indeed liable for libel and the burden of proof would be on DT to prove that they didn't engage in libel.

Through court discovery, DT would be able to bound the failure rate. If it is a really high number, they would have proved their was no libel [assuming this story is defamatory; I read it as a set of experiments that attempts to be representative and whose results do give a bad impression of the reliability of a particular product ..but for good reason].

RE: Crap Yellow Journalism
By Misty Dingos on 7/5/2007 8:14:24 AM , Rating: 2
Sorry about this being a little late. I was out at the beach and celebrating the 4th of July. Oh did I mention I am US citizen. Oh and something else. MS is a US company. Don't know where DT is housed or where the author of the article lives. I would not be surprised if he lived in the US also. So how does this apply? Well let me quote from the same wikipedia article.
Defamation law in the United States is much less plaintiff-friendly than its counterparts in European and the Commonwealth countries.

This is because the First Amendment to the Constitution of the United States gives strong protection to freedom of expression, which arose from the tradition of dissent in the American Revolution. For most of the history of the United States, constitutional protections of freedom of speech had no impact on the traditional common law of defamation inherited from the English legal system. This changed with the landmark 1964 case of New York Times v. Sullivan, in which the Supreme Court of the United States announced constitutional restrictions to state defamation law. The court held that where a public official was defamed, the plaintiff had to prove not just that an untruthful statement was made, but also that it was made with "actual malice" - that is, with knowledge of falsity or with reckless disregard for the truth. The "actual malice" standard was subsequently extended to public figures in general, and even to private figure plaintiffs seeking punitive or presumptive damages.

Yellow Journalism is an American invention. We do it better than anyone on the planet. And it is because we have the absolute right to freedom of speech. There is very little limitation on it.

It would be likely that any lawsuit for libel would be brought in the USA and in US courts the chances of MS winning this are vanishingly small. MS has not been damaged by the article and the consumer may have benefited greatly. If MS was damaged by the article it would have to show what that damage was. And how would they show that? Do you believe that the sales of the Xbox 360 have been damaged in any significant degree? I don’t think so. It is just this type of article in the US that has led to investigations and eventual product recalls.

RE: Crap Yellow Journalism
By hozelda on 7/6/2007 7:11:45 AM , Rating: 3
>> It is just this type of article in the US that has led to investigations and eventual product recalls.

Or how about that just days after this blog (possibly one of the last dominos in a long series) the company in question (Microsoft) announced that they are extending their warranty from 1 year to 3 years on this product (XBox360) and will even reimburse those that paid their return shipping charges in the past. This will result in a 1 billion write off to cover their anticipated near future costs.

I think Microsoft is going to use this 1 billion to cover up some losses from the XBox division to make it look healthier than it is. One billion is less than a month's worth of profits for Microsoft, and putting up good numbers for this business division is important to them, enough to risk playing inside the gray areas in accounting. Nevertheless, this story has done a great service to the consumer. If I were undecided about buying an XBox360, I would now know that I would have a respectable chance of having to deal with the hassles of returning the product (possibly more than once) and waiting for a replacement or else I lose out on any satisfaction from the hundreds spent on the system. If I still wanted to go through with that effort and cost, I would be in a better position of knowing I have up to 3 years of coverage.

We need more stories like this one. Rather than to encourage lawsuits, (if based on facts,) they lead to changes and much needed customer service and product improvements [let's hope we get more than lip service improvements in this case].

RE: Crap Yellow Journalism
By bkm32 on 7/4/2007 9:08:21 AM , Rating: 2
Well done, MD. I believe the scientific term for this would be:


or in the immortal wards of one Eric Cartman, "major pwnage".

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