When an Xbox 360 malfunctions, Microsoft calls it general hardware failure. But gamers have a more colorful euphemism for it: “the red ring of death.”
Last week, the company announced that all Xbox 360 hardware would be retrofitted with a three-year warranty against the “red ring” hardware failure while declining to state the exact cause of the error.
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"We constantly tweak, adjust, and enhance the hardware,” says Microsoft vice president Peter Moore of the error. But even with the generous warranty and claims that the manufacturing issues have been resolved, should gamers feel secure in buying an Xbox 360?
"There's no true guarantee in anything," says Moore.
Microsoft’s new warranty is as close as you're going to get to a guarantee in the video game industry — or in consumer electronics, period. The competing products, Sony’s PlayStation 3 and Nintendo’s Wii, each have 1-year warranties, but neither is plagued by widespread reports of hardware failure on the Internet, especially on gaming-centric blogs and message boards.
Three-year warranties are pretty much the domain of automobiles and washing machines, and in many ways, the Xbox 360 has much in common with these big-ticket machines. The game console has a lot of moving, breakable parts in the chassis — about 1,700 components in all.
And like auto repairs, fixing an Xbox 360 can prove costly to the consumer. Before last week, Microsoft was charging approximately $140 to repair the red-ring error for previously out-of-warranty Xbox 360 owners. Those customers can look forward to full refunds in the near future.
"We determined it was the right thing to do," says Microsoft Vice President Peter Moore about the new warranty. "If we charged you to fix [the console], we are going to reimburse you."
One may understand or even forgive problems with the initial batches of the new, complex video game hardware. But a year after launch?
Charles Rittlinger, of Wichita, Kan., bought his Xbox 360 last November. He waited a full year to buy his machine, and knew all about the hardware-failure problem, well-documented on the Internet by frustrated gamers.
When his own machine failed, Rittlinger discovered that reports of the Xbox 360 failure rate stretched well beyond the vocal hardcore gaming corners of the blogosphere. When he took his faulty Xbox 360 to UPS to return to Microsoft, he says the person at the counter had processed many similar returns.
Even the driver that returned the repaired Xbox 360 to Rittlinger's house was in on the joke, saying "Xbox calling," when he delivered the replacement unit. Luckily, the new unit is functioning just fine.
Since the Xbox 360 is such a complicated machine, there is no discernable method for consumers to spot a potential problem. Though the consoles coming off production lines now may be problem-free, what about the tens of thousands of units currently in retail circulation? Even if the new warranty will cover the red ring failure for up to three years, who wants to view their $400 Xbox 360 Premium as a ticking time bomb?
On the one hand, it’s commendable for Microsoft to be a good corporate citizen and own up to the problems with its Xbox 360. And the financial hit it’s taking for this move is not minor: The company restated its fourth quarter, claiming a charge of up to $1.15 billion to cover the costs.
But as the industry hurtles toward the all-important holiday season, Microsoft may need more than a generous warranty and a public mea culpa to stave off its competitors that are sure to capitalize on this admission of hardware failure.
With the Nintendo Wii showing no signs of slowing down (it outsold the Xbox 360 in May and is still nearly impossible to find at retail) and the PlayStation 3 about to put its underwhelming first year behind it with a plethora of new, enticing games, Microsoft's position as market leader in this new generation of video games is, as Moore may say, without guarantee.