Microsoft Says Xbox 360 Failures “Unacceptable”, Does The Right Thing
Microsoft has made some announcements that point to problems with the Xbox division.
First off, Microsoft acknowledged the Three Rings Of Death problem, calling it “unacceptable”, offering a hugely extended warranty for consoles with the fatal error. All new 360s have a one-year warranty, but 3-ring consoles receive a special 3-year warranty from date of purchase, complete with free shipping. The cost of this new program will be $1.05-1.15 billion for the previous quarter, a major hit to the stock and the bottom line.
Microsoft is doing a very good thing for its customers, finally acknowledging a problem and fixing it for three years, at a great cost to itself. The 360 shipped with a major manufacturing defect, and they are paying over a billion dollars to repair it. I’m thrilled that Microsoft is doing this, but saddened that the company has to take such a major blow. Thanks to this, the Xbox division is going to have a hard time making a profit in the forseeable future.
If you have had to pay to repair your console, ever, for ring of death errors, you will receive a full refund. What about customers like me, who did the smart thing and paid for an extended warranty? It looks like we’re screwed, but I will be calling Best Buy for a refund, and let you know how it goes.
Division President Robbie Bach said, “this problem has caused frustration for some of our customers and for that, we sincerely apologize”. VP Peter Moore went further, saying “We haven’t done right by our customers, and for that I apologize… We listened, and we’re going to make it right”. It’s clear that they have listened to a recent outpouring by the independent media and their customers, demanding an explanation, and they have decided to go all-out and do the right thing. I applaud Microsoft, they have truly done right here.
Microsoft also announced it fell short of its sales projections for the console, shipping 11.6 million units by end of June. It had previously projected sales by that point of 12 million consoles. No word on if the difference between the word “sales” and “shipped” is intentional, but if it is, that announcement is significantly worse than just a miss of 400,000 units.
“Thanks to this, the Xbox division is going to have a hard time making a profit in the forseeable future.”
That may be true. But note that the charge was taken in FY07. FY08 (that just started) will be unaffected.
“No word on if the difference between the word “sales” and “shipped” is intentional, but if it is, that announcement is significantly worse than just a miss of 400,000 units.”
It’s definitely intentional and is shipped not sold. It usually is. Agree it’s bad. You know they would have found a way to jam those remaining 400K units into Retail if they could have. But either they didn’t have sufficient newly modified units and/or retail partners said “no thx”.
Comment by Bob | July 7, 2007