Microsoft to warranty RROD issue for 3 years!!

[MizzouRah]

http://www.xbox.com/en-US/support/petermooreletter.htm (http://www.xbox.com/en-US/support/petermooreletter.htm)

Open Letter From Peter Moore

To our Xbox Community:

You've spoken, and we’ve heard you. Good service and a good customer experience are areas of the business that we care deeply about. And frankly, we've not been doing a good enough job.

Some of you have expressed frustration with the customer experiences you have had with Xbox 360; frustration with having to return your console for service after receiving the general hardware error message on the console.

The majority of customers who own Xbox 360 consoles have had a terrific experience from their first day, and continue to, day in and day out. But when anyone questions the reliability of our product, or our commitment to our customers, it's something I take very seriously.

We have been following this issue closely, and with on-going testing have identified several factors that can cause a general hardware failure indicated by three flashing red lights on the console. To address this issue, and as part of our ongoing work, we have already made certain improvements to the console.

We are also implementing some important policy changes intended to keep you in the game, worry-free.

As of today, all Xbox 360 consoles are covered by an enhanced warranty program to address specifically the general hardware failures indicated by the three flashing red lights on the console. This applies to new and previously-sold consoles. While we will still have a general one year console warranty (two years in some countries), we are announcing today a three-year warranty that covers any console that displays a three flashing red lights error message. If a customer has an issue indicated by the three flashing red lights, Microsoft will repair the console free of charge—including shipping—for three years from the console’s purchase date. We will also retroactively reimburse any of you who paid for repairs related to problems indicated by this error message in the past. In doing so, Microsoft stands behind its products and takes responsibility to ensure that every Xbox 360 console owner continues to have a fantastic gaming experience.

If we have let any of you down in the experience you have had with your Xbox 360, we sincerely apologize. We are taking responsibility and are making these changes to ensure that every Xbox 360 owner continues to have a great experience.

This will take a few days to roll out globally, and I appreciate your continued patience as we launch this program. I've posted an FAQ that should address some additional questions, and we'll update it over the next few days.

I want to thank you, on behalf of all us at Microsoft, for your loyalty.

[MizzouRah]

we are announcing today a three-year warranty that covers any console that displays a three flashing red lights error message. If a customer has an issue indicated by the three flashing red lights, Microsoft will repair the console free of charge—including shipping—for three years from the console’s purchase date. We will also retroactively reimburse any of you who paid for repairs related to problems indicated by this error message in the past. In doing so, Microsoft stands behind its products and takes responsibility to ensure that every Xbox 360 console owner continues to have a fantastic gaming experience.


This is really good news!

[MikeVic]

That's a nice thing to do!

[Eaglesfan27]

Smart PR move.

[Honolulu_Blue]

It's about time.

Just earlier today, I came across this column on IGDA on this issue:

http://www.igda.org/columns/clash/clash_Jul07.php

Stupid People Tricks
Foot + mouth + industry

Not long ago, Xbox Mugwump Peter Moore famously said “I can't comment on failure rates, because it's something- it's a moving target…y'know, things break.”

Things certainly do. In fact, some outlets are calculating 360 failure rates in excess of 30%, and many consumers (me, hello) got back a “repaired” machine with exactly the same problem. But we're not here to discuss the 360's catastrophic reliability problems, or Peter's arrogant head/sand cohabitation, or Microsoft's boneheaded refusal to confront a disastrous situation right when a minor change in corporate behavior could give the firm a needed advantage in a war they're about to lose by their own idiotic choices. No, this month we're going to talk about grander scale folly, of which the above is but an example.

An astonishing number of videogame executives have made entire careers out of saying patently absurd things in public. Peter's quote above is practically sane compared to, say, everything that every Sony executive has uttered since 2004. But though many of these phrasebombs cannot be construed as anything other than slapstick comedy, it is nonetheless hard to take seriously an industry whose executives are apparently gabbling buffoons.

Admittedly, not many nongamers – possibly not many gamers, either – pay much attention to the peculiar day-to-day declamations emitted by these people. So it would be melodramatic to claim that strange comments (such as those made by StarForce employees) are “damaging” to the industry. The things they say are moronic; however, they're not immediately harmful. But though it may not be directly injurious, one does expect a certain level of tact and diplomacy from the representatives of any global, multi-billion dollar business, a level that's not apparent here. And it's gotten worse, particularly on the console side, in this latest generation.

Bill Harris is the go-to guy for tracking this sort of thing, along with shrewd analysis of various industry happenings. His blog Dubious Quality is anything but, and if Penny Arcade is the Doonesbury of the videogame industry, Bill is certainly its Dave Barry, offering witty observations whose hilarity belies their wisdom and depth of perception into a convoluted world that seems to make a business of obfuscation and denial. He created the Executive Interview Rule (“Don't be a dickhead in interviews”) in hopes of steering some of these individuals toward the light. The distressing thing about the Rule is that it has to be stated at all; one would assume it'd go without saying. Long history, though, tells us that it's not the case – at least not in this business. And yet casual, frequent violations of the EIR mean that scarcely a day goes by without some outlandish one-liner from an industry mouthpiece.

The oddball stuff people say must come from some misguided belief that it's effective communication, as if being a jackass is a better way to get attention than being honest or frank. Microsoft's John Rodman employed this strategy when arguing that the 360 and Wii weren't in competition. The approach he chose – calling everyone who owns a Wii juvenile – was louder, but the claim is petty and subjective, and therefore less meaningful, less accurate and less relevant than a much more valid postulation: specifically, that the 360 and Wii aren't in competition because of the price difference and the types of games and gamers each system is targeting. Or, to take it a step further into the realm of sanity, that they're not in competition since many gamers will own both. Rodman's and other statements are geared to generate attention through offense rather than validity. In this way videogame executives are essentially entertainers, more like Ann Coulter than serious businesspeople. Similarly, zombielike repetition of irrelevant talking points to dodge an uncomfortable or embarrassing line of questioning, as Todd Holmdahl did in his recent interview with Dean Takahashi, suggests that these executives are so out of touch with reality and so unskilled in the art of quotification that they simply cannot speak to their public without insulting its collective intelligence.

Would 360 sales have plummeted if Peter or Todd had said “Yeah, we're obviously aware of the issues and we're working hard to address them in future hardware revs; but more importantly, we're doing everything we can to make sure our existing customers' support experience is the best it can be” instead of “y'know, things break?” We'll never know, any more than we'll know what might have occurred if Ken Kutaragi had said “It is really expensive, right now, because of the Blu-Ray. But of course we're working hard to bring that price down as fast as possible. And in the meantime, you really get a lot for your money.” Whether or not honesty is the best corporate policy is open to debate, but misdirection should be limited to the bounds of this universe.

Of the big three, these comments erupt much more frequently from the reality-is-what-we-say-it-is Microsoft and the reality-is-what-we're-smoking Sony than the generally staid Nintendo or any execs on the PC side, though crimes have been committed everywhere. And so far most strange remarks have related to specific products, competitors, instances of massive self-deception or attempts to defraud a public that's far wiser than most game executives seem to believe. Hopefully it'll stay in that realm, because a single incautious, offhanded crack about game content or ratings from some high-up pundit or journalist could seriously damage the anti-censorship movement or endanger the medium's freedom of expression. And once the mainstream press is off and running, no retraction will defuse a potentially disastrous PR nightmare. In the simplest terms, there are high-ranking people in the industry who have quite clearly lost the ability to think about what they say before they say it. And while so far the result has just been amusing, it's not inconceivable that more serious dangers lurk if the carelessness continues.

[TroyF]

Beyond a smart PR move. Outside of one moronic remark, they kept their mouths shut and then came up with a plan to fix the problem. To even reimburse the people who have already had their 360's repaired in the past? Unbelievable move.

Now all that we need is for Sony to come out with another asinine statement and the pre E3 stuff will be complete.

[dawgfan]

Great news - makes me feel much better about my recent 360 Elite purchase.

[Eaglesfan27]

This also makes me happy as I never purchased a warranty and my launch 360 is now covered for another 16 or so months.

According to the Gamespot article, the cost of reimbursing people for past service on their 360's and covering future service will be over a billion dollars!

[Mizzou B-ball fan]

This also makes me happy as I never purchased a warranty and my launch 360 is now covered for another 16 or so months.

According to the Gamespot article, the cost of reimbursing people for past service on their 360's and covering future service will be over a billion dollars!

The point you're making could make for an interesting holiday console war. With the massive losses that Microsoft is likely to take with this move both retroactively and proactively, they'll likely have to keep their console at the current price point. With their Elite console costing $480, a price drop by Sony in the near future could even the price war with Microsoft unable to counter-move without taking even further losses when they were hoping that this would finally be the year their entertainment division would start making money. Certainly a good move that will avoid bad PR, but could be a costly one in that they've lost some of their leverage from a pricing perspective.

[TroyF]

The point you're making could make for an interesting holiday console war. With the massive losses that Microsoft is likely to take with this move both retroactively and proactively, they'll likely have to keep their console at the current price point. With their Elite console costing $480, a price drop by Sony in the near future could even the price war with Microsoft unable to counter-move without taking even further losses when they were hoping that this would finally be the year their entertainment division would start making money. Certainly a good move that will avoid bad PR, but could be a costly one in that they've lost some of their leverage from a pricing perspective.

Please. . . the 360 has been making profits on the consoles for months. Combined with strong software sales, they've got a stash of money. If it means dropping the price point, they can and will do it in a second.

[dawgfan]

Please. . . the 360 has been making profits on the consoles for months. Combined with strong software sales, they've got a stash of money. If it means dropping the price point, they can and will do it in a second.
I will be stunned if MS doesn't match any and every Sony price drop.

[Eaglesfan27]

Please. . . the 360 has been making profits on the consoles for months. Combined with strong software sales, they've got a stash of money. If it means dropping the price point, they can and will do it in a second.

Exactly. I wouldn't be surprised if the 360 drops their price within a few days of the PS3 doing so.

[Mizzou B-ball fan]

Please. . . the 360 has been making profits on the consoles for months. Combined with strong software sales, they've got a stash of money. If it means dropping the price point, they can and will do it in a second.

That would be quite interesting. The Xbox consoles are still working at an overall loss at this point. Certainly would be a tough pill for them to swallow if they had to go to investors and say that they weren't going to get in the black for another year due to the need for a price cut after promising that they would get into the black this year. You are correct that the company overall has money to burn, but I'm not sure they need to burn it at this point unless they see an upswing in PS3 sales.

[Atocep]

That would be quite interesting. The Xbox consoles are still working at an overall loss at this point. Certainly would be a tough pill for them to swallow if they had to go to investors and say that they weren't going to get in the black for another year due to the need for a price cut after promising that they would get into the black this year. You are correct that the company overall has money to burn, but I'm not sure they need to burn it at this point unless they see an upswing in PS3 sales.

You seem to assume MS is run by the same idiocy Sony's gaming division is right now.

Microsoft has already pointed to '08 as the first year they'll turn a profit off of the Xbox. In order to assure that they'll need as large of an install base as they can get. If they think Sony will get a boost in sales from their price drop, Microsoft will absolutely follow suit.

[TroyF]

That would be quite interesting. The Xbox consoles are still working at an overall loss at this point. Certainly would be a tough pill for them to swallow if they had to go to investors and say that they weren't going to get in the black for another year due to the need for a price cut after promising that they would get into the black this year. You are correct that the company overall has money to burn, but I'm not sure they need to burn it at this point unless they see an upswing in PS3 sales.

OK, I'll give you the meeting right now:

MS: We have an announcement to make.

Investors: What?

MS: We need to match Sony's console price drop.

Investors: Why?

MS: We have a slew of hit titles coming out this fall while Sony will be hoping pornographic Blu Ray movies will come out in abundance. Their game lineup for Christmas is about is interesting as dried paint. We have made unexpected progress against Sony now and have a real chance to take a huge portion of their market share, but we can't give them a win in the price war.

Investors: So we'll lose money this year?

MS: Yup.

Investors: How much inroads have we made?

MS: PS2, 120 million. Xbox, 25 million. 360, 10 million. PS3, 3.5 million. We are outselling the PS3 by a 2 to 1 ratio every month and with the strong fall software lineup, that could easily hit 4 to 1. Long term this means more games sales for the console.

Investors: Why in the F*&^ did you waste our time with this stupid ass meeting. Cut the F'n price and let us get back to golf.

[Mizzou B-ball fan]

You seem to assume MS is run by the same idiocy Sony's gaming division is right now.

Microsoft has already pointed to '08 as the first year they'll turn a profit off of the Xbox. In order to assure that they'll need as large of an install base as they can get. If they think Sony will get a boost in sales from their price drop, Microsoft will absolutely follow suit.

And that would be great. The best thing for consumers would be to have a counter move by Microsoft. They would force Sony's hand even further, perhaps resulting in another PS3 price drop in the next 6-9 months. I really hope that Microsoft does exactly that. Would love to see some great prices on both of these consoles as the holidays close in.

[Ironhead]

I have to say this probably just nudged me into getting an Xbox 360. I wanted one but was concerned about all of the issues with systems failing. Now the only question is, how long will it be until newly manufactured Xbox 360's with the corrected issue hit stores.

[gstelmack]

Please. . . the 360 has been making profits on the consoles for months. Combined with strong software sales, they've got a stash of money. If it means dropping the price point, they can and will do it in a second.

Hey, give him credit, he had to dig to come up with some way to bash this move from Microsoft :rolleyes: .

[Mizzou B-ball fan]

Hey, give him credit, he had to dig to come up with some way to bash this move from Microsoft :rolleyes: .

C'mon. There's no bash here. I stated facts......

1. The warranty move is great for the 360 owners.

2. It will cost them 1.15 billions dollars this year in additional expenses.

3. The PS3 price drop is coming in two weeks.

The rest is my opinion. I've certainly never attacked you for your opinion. Yours is just as valid as mine. I would think you might argue that it's even more valid. :)

[Mizzou B-ball fan]

I have to say this probably just nudged me into getting an Xbox 360. I wanted one but was concerned about all of the issues with systems failing. Now the only question is, how long will it be until newly manufactured Xbox 360's with the corrected issue hit stores.

That's the interesting part. In the press release, they still stuck to the 'most owners are very satisfied' statement without fully admitting defects in their console. If they came out and announced that they were now making better consoles at some point in the future, they'd have to admit that they were having severe issues before that. I'm not sure they'd ever do that, right or wrong.

[Ironhead]

That's the interesting part. In the press release, they still stuck to the 'most owners are very satisfied' statement without fully admitting defects in their console. If they came out and announced that they were now making better consoles at some point in the future, they'd have to admit that they were having severe issues before that. I'm not sure they'd ever do that, right or wrong.

I took this statement from the release as an admission that there were errors and they would be fixing them in new consoles:

"We have been following this issue closely, and with on-going testing have identified several factors that can cause a general hardware failure indicated by three flashing red lights on the console. To address this issue, and as part of our ongoing work, we have already made certain improvements to the console."

[Mizzou B-ball fan]

I took this statement from the release as an admission that there were errors and they would be fixing them in new consoles:

"We have been following this issue closely, and with on-going testing have identified several factors that can cause a general hardware failure indicated by three flashing red lights on the console. To address this issue, and as part of our ongoing work, we have already made certain improvements to the console."

If they're smart, they'll make statements as to exactly what they improved or leak it through other means. That would help consumer confidence even more that they not only are helping out the old customers, but have identified and improved all problems in future consoles sold.

[gstelmack]

That's the interesting part. In the press release, they still stuck to the 'most owners are very satisfied' statement without fully admitting defects in their console.

Assume the worst, that the retail report recently released was accurate and 1-in-3 consoles are duds. Wouldn't that mean that roughly 67% of all consoles work just fine with no problems? Isn't 67% > 50%? Even assuming that every single one of the dead consoles leads to people who aren't very satisfied (and for the record, as an owner of one of the dead consoles, I remain very satisfied because Microsoft handled it well), 67% still qualifies as "most".

[TroyF]

C'mon. There's no bash here. I stated facts......

1. The warranty move is great for the 360 owners.

2. It will cost them 1.15 billions dollars this year in additional expenses.

3. The PS3 price drop is coming in two weeks.

The rest is my opinion. I've certainly never attacked you for your opinion. Yours is just as valid as mine. I would think you might argue that it's even more valid. :)

1) This is a no brainer.
2) This isn't a fact, it's an estimate. It could be 3 billion dollars, it could be 500 million dollars. Nobody knows the answer to this one yet and anyone who calls it a fact is misleading the public. Not even MS knows exactly how much this will cost them.
3) We have a flier that says there is a price drop in 2 weeks. We don't have an official announcement from Sony. I think it's going to happen (hell, it should have happened long ago), but to this point we have a guy who collects fliers early and is convinced that the price drop is happening.

Knowing Sony's luck over the last three weeks, it was a mixup and the $499 was actually supposed to be on the Elite. I wouldn't call anything a fact until we get official word.

So you gave one fact, one estimate and one scenario based off of a flier from one store.

Calling that three facts is a bit of a stretch, don't you think?

[Mizzou B-ball fan]

Assume the worst, that the retail report recently released was accurate and 1-in-3 consoles are duds. Wouldn't that mean that roughly 67% of all consoles work just fine with no problems? Isn't 67% > 50%? Even assuming that every single one of the dead consoles leads to people who aren't very satisfied (and for the record, as an owner of one of the dead consoles, I remain very satisfied because Microsoft handled it well), 67% still qualifies as "most".

I think we can agree that 33% failure would be an embarrassing number if it ever came out that was the number. If it came out that were the failure numbers one year ago (when they already knew they had major quality control issues), the 360 would be floundering in a PR disaster. If Sony had that kind of denial over that long of a period, I would be pissed off to high heaven, but I expect quality in a console that costs me hundreds of dollars.

[Mizzou B-ball fan]

1) This is a no brainer.
2) This isn't a fact, it's an estimate. It could be 3 billion dollars, it could be 500 million dollars. Nobody knows the answer to this one yet and anyone who calls it a fact is misleading the public. Not even MS knows exactly how much this will cost them.
3) We have a flier that says there is a price drop in 2 weeks. We don't have an official announcement from Sony. I think it's going to happen (hell, it should have happened long ago), but to this point we have a guy who collects fliers early and is convinced that the price drop is happening.

1) Fact and you agree.

2) The Microsoft press release gave the numbers, not me. Don't blame me for what Microsoft says. Also, someone should easily be able to do the math based on that number to figure out the number of Xbox 360's that failed. Take the rough cost of 1.1 billion and divide it by the cost that they charge to repair and ship the console. It's not totally accurate, but should give a good estimate once someone can separate the old and proactive costs in that number.

REDMOND, Wash. — July 5, 2007 —Microsoft Corp. today announced that it will expand its global Xbox 360™ warranty coverage. Any Xbox 360 customer who experiences a general hardware failure indicated by three flashing red lights will now be covered by a three year warranty from date of purchase. All other existing Xbox 360 warranty policies remain in place.

As a result of what Microsoft views as an unacceptable number of repairs to Xbox 360 consoles, the company conducted extensive investigations into potential sources of general hardware failures. Having identified a number of factors which can cause general hardware failures indicated by three red flashing lights on the console, Microsoft has made improvements to the console and is enhancing its Xbox 360 warranty policy for existing and new customers.

Microsoft stands behind its products and is taking responsibility to repair or replace any Xbox 360 console that experiences the “three flashing red lights” error message within three years from time of purchase free of charge, including shipping costs. Microsoft will take a $1.05 billion to $1.15 billion pre-tax charge to earnings for the quarter ended June 30, 2007 for anticipated costs under its current and enhanced Xbox 360 policies.

“The majority of Xbox 360 owners are having a great experience with their console and have from day one. But, this problem has caused frustration for some of our customers and for that, we sincerely apologize,” said Robbie Bach, president of Microsoft’s Entertainment & Devices Division. “We value our community tremendously and look at this as an investment in our customer base. We look forward to great things to come.”

For any customer who has previously paid for repair expenses related to the three flashing lights error message on the Xbox 360 console, Microsoft will retroactively reimburse them.

At 2:30 p.m. PDT today, Microsoft will hold a teleconference for financial analysts and investors with Robbie Bach, president of Entertainment and Devices, Chris Liddell, senior vice president and chief financial officer, and Frank Brod, corporate vice president and chief accounting officer to discuss today’s announcement. To participate, U.S. residents can dial +1-888-459-9165, and those outside the United States can dial +1-773-799-3324. The passcode is MSFT. The call will be available for playback beginning approximately one hour after the conclusion of the call through 5 p.m. PDT on Thursday, July 12. To access the playback, U.S. residents can dial +1-866-363-4143, and those outside the United States can dial +1-203-369-0210. An audio webcast of the conference call will also be made available at the Investor Relations site at http://www.microsoft.com/msft.

Xbox 360 customers with questions should visit www.xbox.com.

3. The PS3 will be $499 on July 15th according to reliable store sources. It's not a fact at this point, but the sources usually release sales prices for stores 2 weeks in advance at multiple sites, so this shouldn't be any different.

[Ksyrup]

I couldn't/didn't want to say anything about this last week, but we discussed this decision in relation to the extended warranty they offer. I wasn't sure when they were going to announce this, but got the feeling it would be soon.

[Ksyrup]

In retrospect, I should have started an "I'm not allowed to say too much yet" parody thread that no one would have believed...!

[Phototropic]

I think people often overlook the impact the marketplace is having. MS is raking in the cash with that idea, so I'm sure that will help soften the blow.

[MizzouRah]

The point you're making could make for an interesting holiday console war. With the massive losses that Microsoft is likely to take with this move both retroactively and proactively, they'll likely have to keep their console at the current price point. With their Elite console costing $480, a price drop by Sony in the near future could even the price war with Microsoft unable to counter-move without taking even further losses when they were hoping that this would finally be the year their entertainment division would start making money. Certainly a good move that will avoid bad PR, but could be a costly one in that they've lost some of their leverage from a pricing perspective.

A console war? Are you kidding us?

You keep forgetting the PS3 has a shit lineup of games in the future, not to mention the top selling sports game (Madden) is going to run at half the framerate as its 360 counterpart.

Gaming wise, it's a clear decision which console to choose vs the ps3 and 360.

[SackAttack]

In retrospect, I should have started an "I'm not allowed to say too much yet" parody thread that no one would have believed...!

Immortality is mine.

[Mizzou B-ball fan]

Wow. Brutal stuff here. A very unflattering portrayal of the situation on a major news website stuck right at the top of the headlines. This is the kind of PR that Microsoft doesn't need.

http://www.foxnews.com/story/0,2933,288313,00.html

[albionmoonlight]

I will be stunned if MS doesn't match any and every Sony price drop.

I agree.

Step 1: Get their multimedia machines hooked up to as many TVs as possible.

Step 2: [to be determined]

Step 3: Profit.

Unlike the way this joke normally goes, however, Step 2 is only unknown as we wait to see what the near future of media distribution holds.

Both MS and Sony, IMHO, consider whatever profit they make off their game systems qua game systems to be gravy. The real key is owning that space directly above consumer's high definition televisions. Grand Theft Auto is simply the best way to get people to decide to purchase a box to put in that space.

[TroyF]

Wow. Brutal stuff here. A very unflattering portrayal of the situation on a major news website stuck right at the top of the headlines. This is the kind of PR that Microsoft doesn't need.

http://www.foxnews.com/story/0,2933,288313,00.html

I guess I'm trying to figure out what your point is here. What, in that article, was not already told?

1) We know that MS was bothered by the failure rates. They've did everything that could be expected of them to fix that situation.

2) We all know MS has lost a ton of money in the gaming division. Most of that money has been intentionaly lost to gain market share. They lost money on most every Xbox sold.

Honestly, I don't understand your point here at all. It comes off as a little bizzare to be honest. Did you not think the news of yesterday would be reported on websites? If anything, it's EXACTLY what MS needed.

The people who were concerned about a failed Xbox 360 don't have that issue anymore.

Whatever. . .

[Mizzou B-ball fan]

I guess I'm trying to figure out what your point is here. What, in that article, was not already told?

1) We know that MS was bothered by the failure rates. They've did everything that could be expected of them to fix that situation.

2) We all know MS has lost a ton of money in the gaming division. Most of that money has been intentionaly lost to gain market share. They lost money on most every Xbox sold.

Honestly, I don't understand your point here at all. It comes off as a little bizzare to be honest. Did you not think the news of yesterday would be reported on websites? If anything, it's EXACTLY what MS needed.

The people who were concerned about a failed Xbox 360 don't have that issue anymore.

Whatever. . .

The difference is that it's being reported on a site where casual consumers who likely didn't know about the problem will now see it and have second thoughts about the quality of the console. You are correct that the information isn't anything new to the people involved in this discussion thread, but it does paint the console in a bad light to a mass market audience. That's never good.

[albionmoonlight]

I think I agree with Mizzou. That article could have been written as "Microsoft Plans to offer unprecedented warranty on XBOX 360. Hopes to increase market share"

It seemed to have a pretty negative slant the way that I read it.

Of course, the general public probably cares more about the fact that Microsoft is going to spend an extra $1,000,000,000 this quarter than about the quality of the machine itself, so maybe the article is slanted correctly.

[Bee]

I think it's a more of a blow to Microsoft investors than Microsoft consumers. Consumers don't care if MS is losing money. The problem with the console is an issue, but assuming consumers can actually read it appears MS is dealing with that issue.

[TroyF]

The difference is that it's being reported on a site where casual consumers who likely didn't know about the problem will now see it and have second thoughts about the quality of the console. You are correct that the information isn't anything new to the people involved in this discussion thread, but it does paint the console in a bad light to a mass market audience. That's never good.

1) Really? It isn't. So it would have been better if the failure rate story had gotten out to casual consumers without MS doing anything?

2) For a CONSUMER, it paints a fairly decent light. Yes, some consoles failed. But the company in question is fixing the problem, even if it means lost money for the company. For the observer who was on the fence and this was an issue, it sealed the deal.

3) For in investor, some may be scared away. But most of them? MS has said all along that their in it for the long haul.


4) Regardless of any of that, you knew those stories were coming out yesterday, didn't you? MS just reported they'd lose a billion dollars. Did you think that'd get moved to the back page of all websites? MS wanted it on the front page. This was about to blow up into a horrific issue for them. They weren't doing anything about the reports and people were starting to get pissed about that. MS just met the issue head on, dealt with the impact of it and moved on. MS got the issue on the front page on their terms, no Sony's or Nintendo's or some anti MS hack. The "bad" publicity was always going to be there. Doing it this way, they get these stories out of the way before their big releases.

Lets just see if this hurts 360 sales over the next two months. My guess? They actually go up.

[Mizzou B-ball fan]

Lets just see if this hurts 360 sales over the next two months. My guess? They actually go up.

There's no way they go up. Even throwing out the bad publicity involved with the large defect rates and company losses, the console wouldn't have sold more units over the next two months. Halo 3 is due in September. There's one market trend that console makers count on in the 30-60 days before a major game launch.......they're not going to sell many consoles because people are waiting to buy until the game is released.

[CraigSca]

I have to agree with Mizzou as well, but I'm not sure what the impact will be. The community that actually plays these games knows about the issues and sees this as an extended 3-year warranty. People who do not play the games see this as a red flag.

The real issue is - who is buying the console? Is it the person outside the "know" - like a Mom and Dad buying a game for little Ricky - who would see this as a "oh no, the 360 has problems?" Of course, the flipside of this issue is Mom and Dad are very unlikely to drop $499 or $599 on a PS3 either.

I really doubt this changes very much - most Mom and Dads seem to be buying the Wii. The gamers are buying the 360 (and consider this good news) and the holdouts for Sony are still trying to tell us we can watch Revenge of the Nerds 5 in high-def.

[Mizzou B-ball fan]

I think it's a more of a blow to Microsoft investors than Microsoft consumers. Consumers don't care if MS is losing money. The problem with the console is an issue, but assuming consumers can actually read it appears MS is dealing with that issue.

Agreed. My only concern as a gamer is that these kinds of situations can't continue to happen. We have games coming out for $60 that are obviously betas, yet the consumer has no way to return the incomplete product. We have a console that everyone has known for over a year had severe quality control issues, yet the company tried to smooth it over for all this time rather than fix the problem.

I think any gamer can agree that they're tired of being sold a bill of goods on products that are incomplete or broken and then the gamer is the one that ends up getting the shaft while the developers pocket their money. It's becoming a bit too common in this industry.

[Bee]

It's going to be interesting to see what happens to the sales of the 360 and PS3 over the next couple months and going into the Christmas holiday. I have to think that MS will drop the price of their console soon, although they might wait until closer to X-mas. If they do wait, it will be interesting to see how much the price drop will help the sales of the PS3 and if Sony will be able to pull a little closer to the other consoles.

[Mizzou B-ball fan]

It's going to be interesting to see what happens to the sales of the 360 and PS3 over the next couple months and going into the Christmas holiday. I have to think that MS will drop the price of their console soon, although they might wait until closer to X-mas. If they do wait, it will be interesting to see how much the price drop will help the sales of the PS3 and if Sony will be able to pull a little closer to the other consoles.

Given the losses with yesterday's decision and the upcoming Halo 3 release, I'd be shocked if they cut the price right before the console sales boost that's likely to occur around the Halo 3 release. They've got enough of a lead right now that they can let a bit of it erode while the PS3 is sold at a loss level for Sony.

[Kodos]

yet the company tried to smooth it over for all this time rather than fix the problem.


Errrm. The original open letter said they had made changes in production to address the problem, and they are taking care of the existing consoles with problems. How are they not fixing the problem?:confused:

[TroyF]

Agreed. My only concern as a gamer is that these kinds of situations can't continue to happen. We have games coming out for $60 that are obviously betas, yet the consumer has no way to return the incomplete product. We have a console that everyone has known for over a year had severe quality control issues, yet the company tried to smooth it over for all this time rather than fix the problem.

I think any gamer can agree that they're tired of being sold a bill of goods on products that are incomplete or broken and then the gamatheir money. It's becoming a bit too common in this industry.


OK, would you please get off your high horse for a few seconds?

These things will continue to happen. Sony was sued because of an optical drive problem with the PS2. These issues aren't going away. Nor are video games.

We are gamers and we like games. So we pay. The PS3 has a complete and total lack of quality games out for the system, yet people are seriously considering purchasing it when it hits the magic $400 mark. Why? Because we like games.

And the consoles will continue to sell. Lets not take some production problems with the 360 as the end to gaming as we know it. It's not going to happen.

As for the sales being higher in the next couple of months, I stand by the prediction. Halo 3 isn't the only big game coming out over the next few months. There are a slew of big titles coming out and Halo 3 is actually going to be the last one on the list. I'm not saying the 360 is going to jump up by a couple hundred thousand units a week, but I'd be willing to bet they jump up 5k a week or so, if not a bit more.

We'll see.

[Mizzou B-ball fan]

Errrm. The original open letter said they had made changes in production to address the problem, and they are taking care of the existing consoles with problems. How are they not fixing the problem?:confused:

They haven't addressed any specifics as to what the exact problem was. They also have not given an exact date or told consumers which 360's do/don't have the problem. I agree that they are making good steps to remedy the situation. My point was that they should have done this a year ago when the problem was already well known and they refused to acknowledge it. That's 'smoothing it over' IMO.

[Mizzou B-ball fan]

OK, would you please get off your high horse for a few seconds?

I'll be sure to do that. Thanks, Troy.

[Bee]

Given the losses with yesterday's decision and the upcoming Halo 3 release, I'd be shocked if they cut the price right before the console sales boost that's likely to occur around the Halo 3 release. They've got enough of a lead right now that they can let a bit of it erode while the PS3 is sold at a loss level for Sony.

That's a possibility, but I think Troy is right that for MS it's all about market share and I'm not sure they will want to let any of their lead erode to Sony at this point. I think from a pure hardware point the PS3 is a better console and if MS lets Sony get back into the race it could have long term ramifications. I can see MS waiting until closer to X-Mas though and hoping to capitalize on Christmas purchases with a lower price. I also think MS should be concerned about the Wii. If they lower the price enough they might be able to take away a small fraction of the Wii sales as well (I don't think they can take much from the Wii though because they appeal to a slightly different customer base).

[Mizzou B-ball fan]

That's a possibility, but I think Troy is right that for MS it's all about market share and I'm not sure they will want to let any of their lead erode to Sony at this point. I think from a pure hardware point the PS3 is a better console and if MS lets Sony get back into the race it could have long term ramifications. I can see MS waiting until closer to X-Mas though and hoping to capitalize on Christmas purchases with a lower price. I also think MS should be concerned about the Wii. If they lower the price enough they might be able to take away a small fraction of the Wii sales as well (I don't think they can take much from the Wii though because they appeal to a slightly different customer base).

I agree. If I were MS, I'd cut now and go for market share. We'll have to see which option they take.

I really don't think that MS or Sony should try to compete with the Wii at this point. It's a futile fight. These two need to just worry about beating the other console. After that, they can then concentrate on building a bigger market share and competing with the Wii. There's still plenty of money to go around even with the Wii selling a lot of consoles.

[TroyF]

I agree. If I were MS, I'd cut now and go for market share. We'll have to see which option they take.

I really don't think that MS or Sony should try to compete with the Wii at this point. It's a futile fight. These two need to just worry about beating the other console. After that, they can then concentrate on building a bigger market share and competing with the Wii. There's still plenty of money to go around even with the Wii selling a lot of consoles.

MS WILL go for market share. It's been their strategy from day one.

What makes the most sense? What they should have did to begin with:

The Elite goes to a $400 price point
The Premium goes near the $300 price point mark.
The core unit goes bye bye.

Then they don't have to worry as much about hard drives either. Game developers can make games that require the hard drive and a majority of 360 users will have the HDD. If they made a huge price cut to the standard drives at the same time it would be brilliant. I don't think they are quite that bright, but you never know.

[Eaglesfan27]

There's no way they go up. Even throwing out the bad publicity involved with the large defect rates and company losses, the console wouldn't have sold more units over the next two months. Halo 3 is due in September. There's one market trend that console makers count on in the 30-60 days before a major game launch.......they're not going to sell many consoles because people are waiting to buy until the game is released.


You are wrong on this. I know you don't like EA Sports, but you are vastly underestimating their impact in this whole situation. Madden and NCAA sell more than most games and they are going to lead to a significant spike in sales of 360's. On the sports gaming boards, people are selling their PS3's and buying 360's because of the frame rate issues. As people who are considering which console to buy and are contemplating going next gen, they will check out these games on both systems, they are going to come away buying the system where their favorite game looks better. From all accounts that will be the 360. The main thing that was holding people back was the concern about durability and that was just answered.

[MizzouRah]

You are wrong on this. I know you don't like EA Sports, but you are vastly underestimating their impact in this whole situation. Madden and NCAA sell more than most games and they are going to lead to a significant spike in sales of 360's. On the sports gaming boards, people are selling their PS3's and buying 360's because of the frame rate issues. As people who are considering which console to buy and are contemplating going next gen, they will check out these games on both systems, they are going to come away buying the system where their favorite game looks better. From all accounts that will be the 360. The main thing that was holding people back was the concern about durability and that was just answered.

My thoughts exactly.

Again, people go where the GAMES are.

[Bee]

I don't think NCAA is really in the same category as Madden for moving consoles, but I do agree Madden is a pretty major title and will most likely have an impact on sales.

[GoSeahawks]

I can't believe this. My 360 hasn't worked since Christmas (3 red lights) and yesterday morning I finally decided it was time to send it in for a repair. I wonder how long it will take to get my money back.

[Eaglesfan27]

According to the FAQ, it will take them 10-12 weeks to get the checks out to refund everyone who has already paid for repairs.

[Vinatieri for Prez]

Does Mizzou B-ball fan work for Sony or something? His comments here and in the HD-DVD/Blu-ray make me think he does or they have some photos of him in very compromising positions.

[Mizzou B-ball fan]

Interesting move by Microsoft in regards to the 1.1 billion dollar expense for this situation. It appears that they expensed all 1.1 billion on the fiscal year ending June 30th, 2007. So they basically took a huge financial hit on last year's financials overall. Should help this year's financial report, but it's going to kill the entertainment division report for last year.

[Logan]

Did they make a bundle during the year? If so, it's the smart thing to do.