This is it entirely. MS have fudged the figures so it appears on last years balance sheet (conveniently with Vista and a new edition of Office). To the rest of the world, this just looks like substandard return for a single quarter because the product (Vista and Office - the true MS money-machine) did not launch successfully. It is only if you delve into the figures that you would ever uncover this balance discrepancy. Had the billed it in '08 - after all the OEM's had paid out for their pre-launch licenses - the figure may have appeared worse (Vista/Office aren't selling, compound that with a $1B 360 'error'). As it stands, cashing in last year has avoided all this press; it's out the way before E3 too; no one cares.
3 year warranty for all X360s.
- Thread starter Cheezdoodles
- Start date
This is it entirely. MS have fudged the figures so it appears on last years balance sheet (conveniently with Vista and a new edition of Office). To the rest of the world, this just looks like substandard return for a single quarter because the product (Vista and Office - the true MS money-machine) did not launch successfully. It is only if you delve into the figures that you would ever uncover this balance discrepancy. Had the billed it in '08 - after all the OEM's had paid out for their pre-launch licenses - the figure may have appeared worse (Vista/Office aren't selling, compound that with a $1B 360 'error'). As it stands, cashing in last year has avoided all this press; it's out the way before E3 too; no one cares.
First off, its not 'fudged', they quite legally took the charge in FY07 instead of FY08 and either way, one year will look worse than it could have. Obviously the point is to put something like this behind them, financially, as quickly as possible. No delving is required and theres no discrepancy. Quite honestly, I know all I need to know about this by now anyway, and wouldnt want any E3 coverage spent on this when theres going to be a truckload of GAMES to talk about. You seem to have taken offense to when and how they decided to lay out 1 billion dollars to fix this problem, why?
I never said there was anything illegal about it, just announcing on the brink of FY08 was sly. My comment is merely about the financial ramifications that several people have highlighted (why has MS share price not gone down). I do not condone the move in anyway, I whole-heartedly support it - games can only get better with more competition (All hail the free-market! All hail Friedman!).
Even worse then that, was their iBook G3 main logic board failures. They didn't catch this until 1-2 years after release.
What did they do? Extend the warranty for any iBook G3's that had a failed logic board to 3 years. The original warranty was 1 year. They made it through that PR wise.
Eerily similar situation to what Microsoft is doing.
It did go down, about 10 cents--that's roughly the value of 1 billion dollars across all Microsoft shares. So the market noticed it and yawned.
LOL at the Sony posters who want to continue to beat this dead horse.
good for MS in stepping up and paying the price for the peace of mind the customers deserve.
the fact remains that the CONTENT is desired by many people and the 360's WILL continue to be purchased (to some peoples' dismay evidently
). Ms has now also gone ahead and made that (previous) ~25% risk in experiencing that content a 0% risk for at least 3 years.
Me, I have enjoyed my system now for 20 mos without interruption and a two year warranty (walk in walk out replacement) in pocket. so doom and gloom indeed IMO.
good for MS in stepping up and paying the price for the peace of mind the customers deserve.
the fact remains that the CONTENT is desired by many people and the 360's WILL continue to be purchased (to some peoples' dismay evidently
). Ms has now also gone ahead and made that (previous) ~25% risk in experiencing that content a 0% risk for at least 3 years.Me, I have enjoyed my system now for 20 mos without interruption and a two year warranty (walk in walk out replacement) in pocket. so doom and gloom indeed IMO.
Mintmaster
Veteran
If you take a closer look at some of my posts on the topic, that's exactly what I'm hinting at.
MS is the only one going for RoHS compliance for units in all territories, AFAICS. Sony probably got a lot of knowledge in the 17 months between the 360 launch and Euro PS3 launch, and they make tons of electronics to boot. Wii is very low power so they probably have no worries.
Microsoft did fine with the original XBox and countless other mass produced electronics like mice, keyboards, etc. Take all the reports of bad solder from hobbyists, news stories, a console repair company (Micromart), electronics companies (Zephyrtronics), then couple it with the RoHS timing, and it really make a lot of sense and probably not just a coincidence. Although anectodal, I've heard bad things about lead-free solder too.
It's probably a "perfect storm" scenario. Sorta high power, less than perfect cooling (though IMO if a better company designed the cooling, it would be quieter as opposed to lower temp.), unknown long-term data on various lead-free solder products, time pressure to launch before the holiday season, etc.
Mintmaster
Veteran
Thank you for the great post.
It's a little bit of a fudge though. They want to be profitable in FY08, so drop a shedload of cash in FY07 to offset future expenses. Kinda like, they record a $20B loss in one year as they bury it in the ground, so the next year they can dig it back up and claim a sudden $20B profit! If instead of setting aside $500 Million for future warranty services, they paid for those as they happened, there'd be an extra couple hundred million costs each year, which could impact their goal of profitability.
1) Why post a 20 billion loss one year just for a 20 billion profit the next. Not much sense tax wise.
2) With record revenues and in particular income this financial year, wouldn't hurt to bring some of that future loss to coincide with the large income from a freshly launched OS.
LOL at the Sony posters who want to continue to beat this dead horse.
good for MS in stepping up and paying the price for the peace of mind the customers deserve.
the fact remains that the CONTENT is desired by many people and the 360's WILL continue to be purchased (to some peoples' dismay evidently
Me, I have enjoyed my system now for 20 mos without interruption and a two year warranty (walk in walk out replacement) in pocket. so doom and gloom indeed IMO.
the live needed to keep the current customers.If there is no live and only xb releases, the only one advantage will disapear.
As the sony catch up with the m$,less and less hcgamer will stay with the box.
C'mon.It is not the soft business.Such a kind situation the architecture company have to pay all of the cost of the modification(usualy the planning is the 3-5% of the whole project,so if the cost is only this they can be happy),and if there is a danger of injury or collapse the chief engineer will never do any job again on this field or in worst case he will go to the jail.
Ther is no excusse about new material,new architecture and so on.There is only the result.Is it work or no.
The backbone of the electric system is desinged for 30 year continous operation,but usualy it can work for 60 year with a major renewal.Hey,and if you swith on the light the response is not "everything is break down sometime",or "I work for 3 year now it is the time for the breakdown".You can use servers,refrignatros and so on because the reliability of the electrical system is very high.
for me even 1-2 % is extremly high.more than 10% mean I can not use the product for anything.And we talk about 25% failure rate within 1 year(aprox medium of the quantity).Oh,and we don't know the internal rework rate.
If you're going to make a loss in the first year anyway, if by increasing that loss you offset a loss next year, you get a win on paper.
That is, you either have FY07 = Loss, FY08 = Loss; or you have FY07 = Loss, FY08 = Profit. If you can arrange expenditure like that, especially when you've set a target for profitability in FY08, it's a move you'd likely make to appease investors and industries watchers. Which headline at GI.biz would you prefer if you were an MS exec? 'Microsoft's gaming division finally records a profitable year' or 'Microsoft's gaming division maintain annual losses for the company for the 8th consecutive year'? If your looking to be profitable by $50 million in FY08, would you really want a possible $200 million extra expense on warranties that'll drag you back into the red? Better set that money aside in a loss year and not worry about it in future. Even though the expenses remain the same, the PR and corporate image is much healthier.
LOL at the Sony posters who want to continue to beat this dead horse.
good for MS in stepping up and paying the price for the peace of mind the customers deserve.
the fact remains that the CONTENT is desired by many people and the 360's WILL continue to be purchased (to some peoples' dismay evidently
Me, I have enjoyed my system now for 20 mos without interruption and a two year warranty (walk in walk out replacement) in pocket. so doom and gloom indeed IMO.
LOL at the MS apologists who think that all people concerned with these reliability issues are "Sony posters".
Perhaps it is people who will down on MS no matter what they do. But perhaps it's also people who are conscientious consumers and are alarmed at a 25% failure rate after only 1-1.5 years.
Great, MS has extended their warranty to cover the failures. Unfortunately, that's like putting a tiny bandaid on a huge gaping wound. They need to fix their reliability issues at the source before this is truly resolved imo.
Hopefully the 65nm revision does the trick. Personally I'm not the kind of consumer who enjoys playing russian roulette with his electronics. I suppose others don't really care that much.
Right but this isnt a 500 million dollar slush fund that they intend on using for salaries, office supplies, company cars, etc. This is a specific amount of money for a specific circumstance based on specific data. I see your point and certainly the perception of profitability for the division in 08 is paramount, but 'fudge' to me has the connotation of a more devious purpose.
Now if they said something like "we're going to put 500 million aside in 2007 for random operting costs in 2008", then yeah, theyre clearly stacking the deck for bogus profitability. I believe that these costs have been projected based on their internal failure data so, to me, it is 'legit'.
EDIT: The drama that unfolds in your sig always keeps me laughing.
scooby_dooby
Legend
Agreed. They should put a sticker on every box...
Honestly you're right - they really should highlight this point. In the case of individuals who haven't been following this issue, it will just look like a straight-up benefit compared to its competitors, and ironically probably inspire feelings of "quality." For people that have been following it, the reminder that additional peace-of-mind is now present in the unit is drilled home.
It will surely help, but let's not forget this is not even the only issue with the 360. There's the disc-scratching issue especially troubling the first few million 360s that consumer organisations have been complaining about to Microsoft, and that's not covered by this warranty which only explicitly covers this red rings of death hardware failure.
In terms of giving the impression that the console is high-quality, Microsoft has some ways to go. But as far as easing the mind of those who already want the console but started to become worried about the increasing buzz about hardware failures, this is pretty much the best thing they could have done short of doing this sooner or not gambling with this kind of epoxy in the first place.
In terms of giving the impression that the console is high-quality, Microsoft has some ways to go. But as far as easing the mind of those who already want the console but started to become worried about the increasing buzz about hardware failures, this is pretty much the best thing they could have done short of doing this sooner or not gambling with this kind of epoxy in the first place
.