Red ring of Xbox death costs Microsoft $1bn
Hot money hole
Microsoft is taking a $1bn hit to fix Xbox 360s, conceding residual hardware faults in its games console are causing users frustration and an "unacceptable number of repairs."
The software giant said Thursday it's extending the Xbox 360's current one-year warranty to three years from date of purchase to cover a hardware crash that generates a trio of red warning lights, branded "the red ring of death." Microsoft is also reimbursing customers who've previously paid for repairs.
Additionally, Microsoft admitted the Xbox 360 has failed to hit its planned target of 12 million units sold by the end of June - chief financial office Chris Liddell said 11.6 million devices had sold since the November 2005 launch. The 12 million number had already been cut in January from between 13 million and 15 million.
The news came as Microsoft also passed its self-imposed deadline for its latest consumer venture, the Zune music player. Microsoft's lack of formal announcement suggests it failed in its target of one million Zunes sold by the end of June - the close of Microsoft's fiscal year.
Microsoft has taken increasing flack on the Xbox 360, not simply because the hardware is copping out at such a high frequency, but also for poor Microsoft customer service.
Some 30 per cent of Xbox 360's are estimated to overheat heat and fail, with one man surely scooping an award for endurance and loyalty having owned a total of eight units that bombed. Until now, customers outside their warranty have been encouraged to call a special telephone repair line where they've been charged $129 to fix the $300 - 400 machines. Those reluctant to spring for the cash have been offered a number of DIY fixes, such as those here and here.
After a year and a half of mounting complaints, Robbie Bach, president of Microsoft's entertainment and devices division, downplayed the timing of today's news saying: "This is just one of those things that happens when it happens. We reached our conclusion early this week and because it's a financially meaningful issue we had to announce it immediately."
Microsoft will absorb the Xbox 360 costs, estimated at between $1.05bn and $1.15bn, in the fourth quarter that just closed. Microsoft is due to present the full quarterly and annual results later this month.®
COMMENTS
Error
Does this mean that the (normally tautologous) 'unexpected error' messages will be amended to read 'expected error'..?
CAD$126 question?
I'm also on my third Xbox 360, but not for the red ring of death problem. That only appeared for the first time last month.
Outside of warranty and not prepared to pay $126 for what I believed to be a MSFT problem, I opened the box and fixed it myself... at least so far, so good (fingers crossed!)
Kudos to MSFT for extending the warranty, but I wonder if it will be extended to those of us who opened our Xbox 360s to fix the red ring of death problem? Somehow I doubt it :-(
Micro$loth are doomed
Face it shill, fanboy, strawman Bills too old to cut the mustard anymore and all the semitard grade inflated business school graduates who couldn't balance a checkbook if their lives depended on it can't save that bombed out piece of sh*t company. I love this give me more.
Re: Microsoft are doomed
ROFL! Are you willing to put money on that?
Whatever problems MS (sorry I'm not big or clever enough to use a '$' or call them microshaft or whatever ) has with xbox or zune or even vista pale into insignificance compared to the number of companies that have made significant investment in windows in general (and .Net in particular). The fact remains that for the vast majority of computer users linux/osx/insert-your-favourite-os-here are simply not a viable alternative to windows.
There's a lot of things I don't like about microsoft, but they also do some good things too (I defy anyone to name a better debugger than visual studio). and they aren't going away.
and as for the 360, ok they messed up, but at least they're trying to fix it. which is more than sony ever did...
Microsoft are doomed
This is one example of why Microsoft are doomed. If it wasn't for their lock-in practices they would be nobody now.
The Zune is a flop, the XBox 360 was Microsoft's attempt at getting a entertainment and media hub into all homes, but they've cut too many corners. You would think they would have learned from the XBox and it's power cable and power supply issues.
Windows Mobile keeps getting a lick of paint, new buttons and a handful of new features (largely for their own online services) and the rest stays the same as ever (thank god for iPhone, a well deserved kick up the butt for Microsoft).
