Defective Xbox 360 costs Microsoft $1billion

Microsoft announced on Thursday it expects to spend more than a billion dollars fixing flawed Xbox 360 video game consoles, which have logged "an unacceptable number of repairs."

The blow to Xbox 360's reputation comes as it vies in the marketplace with Sony's languishing PlayStation 3 and Nintendo's coveted Wii consoles, which made their debuts in November of 2006. Microsoft reports it has sold approximately 11.6 million Xbox 360 consoles since its US launch at the end of 2005.
Defective Xbox 360 costs Microsoft $1billionThe figure falls short of the 12 million unit mark Microsoft set as its goal. "That is slightly shy, but in the overall context of the marketplace we are happy with that number," Microsoft chief financial officer Christopher Liddell said in a conference call with reporters and investment analysts.

The company would not disclose how many of the consoles have needed repair. "Suffice to say that with a billion-dollar charge and the focus we are putting on this it is a significant number and one that has our attention," Bach said. "We think we have our hands around it at the engineering level."

Microsoft said it discovered console flaws that cause hardware failures signaled by three flashing red lights. The problem is one of Xbox 360 design, not something caused during assembly, according to Microsoft Entertainment and Devices Division president Robbie Bach. "It is really our responsibility not anyone else's," Bach said during the conference call. "You should think of it as a Microsoft design challenge."

Share with friends
Share to Facebook Share to Twitter Stumble It Email This More...