Jul 05 - Xbox 360 Repairs Will Cost Microsoft $1Billion

[outlaw420]

Thursday July 5, 7:54 pm ET
By Jessica Mintz, AP Business Writer

Microsoft to Take $1B Charge for Xbox 360 Warranty Extension

SEATTLE (AP) -- Microsoft Corp. said Thursday it expects to spend more than $1 billion to repair widespread hardware problems in its Xbox 360 video game console after a large number of them broke down.

Microsoft said it would extend the warranty on the Xbox 360 to three years after too many of the consoles succumbed to "general hardware failure," but the company provided few other details about the extent of the problems.

"We don't think we've been getting the job done," said Robbie Bach, president of Microsoft's entertainment and devices division, which also makes the Zune digital music player. "In the past few months, we have been having to make Xbox 360 console repairs at a rate too high for our liking."

Bach said the company made some manufacturing and production changes that he expects will reduce Xbox 360 hardware lockups, but he declined to identify the problems or say which others might remain. Microsoft said it will record a charge of up to $1.15 billion for its fourth fiscal quarter, which ended June 30, to cover the additional costs associated with the warranty extension.

The software maker also said sales of the console fell short of expectations for the fiscal year that just ended.

Matt Rosoff, an analyst at the independent research group Directions on Microsoft, estimates that Microsoft's entertainment and devices division has lost more than $6 billion since 2002.

Microsoft has written down larger amounts in the past -- more than $10 billion in the late 1990s related to investments in telecommunications companies, and more than $5 billion related to antitrust issues -- but a $1 billion write-down for one division in one quarter is significant.

"It suggests the problem is pretty widespread," Rosoff said.

Microsoft will pay for shipping and repairs for three years, worldwide, for consoles that experience hardware failure, which is usually indicated by three flashing red lights on the front of the console, something gamers sometimes refer to as "the red ring of death." Previously, the warranty expired after 1 year for U.S. customers and 2 years for Europeans.

Microsoft also will reimburse the "small number" of Xbox 360 owners who have paid for shipping and repairs on out-of-warranty consoles, Bach said.

In June, bloggers speculated that the Xbox 360 return problem was getting so severe that the company was running out of "coffins," or special return-shipping boxes Microsoft provides to gamers with dead consoles. "We'll make sure we have plenty of boxes to go back and forth," Bach said in an interview.

Chris Liddell, Microsoft's chief financial officer, said in a conference call that the company sold 11.6 million Xbox 360 consoles since the product's November 2005 launch, missing a target for 12 million units by the end of the fiscal year.

Microsoft's entertainment and devices division reported an operating loss of $315 million on $929 million in sales for the three-month period that ended in March.
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http://biz.yahoo.com/ap/070705/micro...nty.html?.v=10

[SCOLANATOR]

Oh just peachy, well my 360 broke and I never got it fixed/ replaced, thanks microsoft, you've done it again.
~scol

[jmilch]

Microsoft is actually very difficult to work with IMHO, just like 99% of huge tech companies. I have a 360, but I would buy a new one before I went through the hassle I went through before with them, it was seriously that bad.

[delas52]

This was a great move by ms. They admitted their error and are trying to fix it (at quite an expense, too).

Props to ms.

[MaDoNiOn]

Originally Posted by jmilcher

Microsoft is actually very difficult to work with IMHO, just like 99% of huge tech companies. I have a 360, but I would buy a new one before I went through the hassle I went through before with them, it was seriously that bad.

It was so easy here in UK. i phoned them up tolfree. Said to the lady that 3 red lights of death was the problem. They said they will email me a prepaid adress & i must print off and then i must phone UPS to collect. Done done .

[Fourth]

a step in the right direction at least. a lot of times companies tuck their tails between their legs and just say, "oops... heh. it didn't work." proof can be seen in a little game called Battlefield 2 by EA.

[op1e]

If only we could demand such of car dealers. Ditto on the game support as well. Ubi and EA are guilty in this regard.

[Leviathan]

That's great news. Somebody at M$ isn't an idiot and realized their huge problem.
At least I can feel safe knowing my 360 is covered for 3 years. GJ M$.

[leewink]

Wouldn't feel sorry for them, if they didn't release such a POS box, they wouldn't be with this bill (LOL) now.

[eXclusive]

I can see why some people are relieved with their replacement and warranty service. I can't see why people are praising M$... They send you broken hardware (360s are ticking time bombs) and when it breaks people just go oh thank god Microsoft is a company of saints and I am lucky enough to get a replacement after I jump through a few hoops for them!

[bravotsx]

how long has the 360 been out? it's crazy that they even needed to wait that long to do something about a well known issue.

[CybrSlydr]

I beat ya to it.

http://forums.extremeoverclocking.co...d.php?t=263869

[Leviathan]

Bar and Grill = very wrong forum

[SailentShado]

Originally Posted by bravotsx

how long has the 360 been out? it's crazy that they even needed to wait that long to do something about a well known issue.

Micro$haft doesn't care. XD

[delas52]

I'm loving the anti-ms bandwagon everyone is so quick to jump on.

I respect them for admitting their error and trying to correct it.

[bravotsx]

I think after releasing a product that's been on the market for YEARS mind you, wouldn't you say it's about time they did something?

[op1e]

The fact that people were water cooling them the same week they came out shoulda been some kind of clue.

[DeepFriedCPU]

I'd say good job Microsoft... they are stepping in the right direction... the cost of repairs is nothing compared to the cost of customer's affection in my opinion... anyways Bill Gates still has $56 billion in his wallet... Microsoft should be fine

[Narcosis219]

Originally Posted by delas52

I'm loving the anti-ms bandwagon everyone is so quick to jump on.

I respect them for admitting their error and trying to correct it.

Too bad they denied it for the last half year. They even said the failure rate is 3% when retailers and even the repair centers (who were overloaded with consoles to fix at over 2500 a DAY) reported 30%. This was an issue that Microsoft put off for a year until now. They're a little late. This should have been addressed 8 months ago. No respect from me.