3 year warranty for all X360s.

Well, I lolled.

 

Thats not a fair or accurate statement. It implies that ever few months you have to fork over $140 to get your current xbox360 back working. When my suffered the 3 red rings of death, it was $140 to repair it. But that included a new one year warenty from the date the replacement unit arrived. Plus one month "free" of the gold service. Not like thats worth much. So your only out $140 per year so to speak..which is still not a good thing.

 

Seriously?

WTF

 

Not to mention the failure rate is ~20% according to fox, 4 out of 5 haven't failed.

Saying most users have to "Fix it every few months" is idiotic.

 

Keep in mind they were in tight supply for a good part of those first months after launch. Maybe it took time for it to build significant mass? Mine worked great for the first year then puked on its 13th month of service I am sure others worked for awhile then puked which would make sense not to see this rise until some time has passed.... just guessing here..pasing time unitl its time to go home from work

 

I think what happened is the first batch of 360 had widespread failures, prompting MS to extend warrantee on all 2005 units. They increased their testing standards, and then over the next year, the rate was signifigantly better, and now over the last few months units have began coming in much faster, probably all the 2006 units failing after a year or so of use.

Saying it wasn't on the radar is pretty hard to believe though, just look how many times have they had to address the issue in interviews...

 

Good point Scooby

 

To me, this is just the perfect example of how companies have strengths. Microsoft is a software company and as Xbox Live and XNA has proven, they do services and SDKs and tools that make their platform better.

But they don't seem to get hardware at all. They entered the console market with the Xbox and contracts with vendors that didn't allow them to reduce costs. They enter gen 2 in better position in that regard, but seem to not follow basic manufacturing processes.

I would have thought that each and every defect in the short term would be exhaustively researched for cause. And once cause was known, the manufacturing process would be changed to fix that cause. Perhaps this happened behind the scenes or perhaps the root cause was too expensive to address easily. Or perhaps there were multitudes of causes and they wanted to roll up fixes in different stages. I'd love to get the inside scoop on what happened over the past couple years leading up to this point.

 

Has it ever been determined if multiple failures were due to the reissue of 'factory refurbished' 360s?

If so/not, the speculation that these numbers are based upon could be far from the truth.

Who is to say that part of the $1B in repairs isn't due to MS repairing the exact same console multiple times? That would reduce the number of units sold that required repairs, and influence the 20-25% failure rate that is being assumed.

If we take the theoretical position that 5% of the consoles failed, yet MS had to repair them 4 times each, doesn't that fit into all the facts we actually have?

Yes, I think that's also an absurd speculation, I'm using it to illustrate that it appears people are jumping to conclusions with an extremely limited amount of factual information.

 

5% from 10 million is 500 000.
10 billion divided by 500 000 is 2000$.
If your absurd speculation is true, the ms spend 2000 $ to repair the scrap.
It is several times more than the console actual price.

Or the other rot cause can be that they don't fix the issue,and same part of the money needed for the repairs of the future consoles.

 

---4564564

 

actually

that would mean with a %5 failure rate, 1000$ total loss (includes shipping & handling, repair, new unit and logistics&operational costs) per defective unit
with a %10 failure rate, 500$ total loss per defective unit
with a %15 failure rate, 375$ total loss per defective unit
with a %20 failure rate , 250$ total loss per defective unit

 

For a while the rule for refurb coverage was either your original warranty or 90 days, whichever is longer. First instance I heard how someone wrestled a genuine new warranty for a refurb from the support staff was a couple of months ago I believe, and that was touted as some major precedent. It all depends on who is on your case and how aggressive you are anyway. I've heard of several instances where consumers were able to haggle down the repair cost to half, and/or getting freebies, as you, but if you're just going through the motions, they would charge you 140$.

Anyway, the point was that after the end of your warranty, there's some monetary loss when the thing breaks, no matter how you slice it, and that tangible cost, which has now been taken away, would have made the case.

 

"According to Fox" is equivalent to the result of simple formula of 1 billion dollars / 400$. Which is coincidentally what a dude posted on GAF a day earlier as the absolute lower bar for failed consoles (because if one XBox 360 costs more than its retail price to repair, it would become cost effective to just throw it in a land fill and ship out a new one instead.

Why thank you. Let's just say that your average XBox 360 refurb doesn't last as long as a new unit, by some measurable margin, okay?

 

Key phrase here, often forgotten, is 'Mean Time Before Failure'. They could have been seeing 5% failure in the first 12 months, with a MTBF for the system on average of 13-16 months, at which point they start flooding in. Whether MS really knew or not, we can't really say, but I'll afford them some benefit of doubt as I usually do. It would make more sense that they weren't seeing disastrous failures, than were seeing them but did absolutely nothing about it!

 

Here's a transcript from what looks like most of the call today:

http://www.joystiq.com/2007/07/06/microsofts-red-ring-warranty-conference-call-transcribed/

And yes they wanted to get this charge on the books for all current and future consoles in this FY to protect 08 as they believe they have corrected the issue.

 

..sigh

No, you are still using incorrect assumptions based upon facts you just don't have.

First, you don't know how many of the same consoles were repaired multiple times.

Second, half of the $1B is for past repairs (the portion you are trying to figure out) as well as an undisclosed amount of items in inventory that were never sold, and therefore not part of the 10m.

Third, as <nu> mentioned, the $1B in costs most assuredly includes all costs involved, including support staff, shipping, free give aways, etc...

 

Exactly. Here's the way it's working over at MS in terms of their exposure on this...

All costs incurred due to servicing units during the past 1 1/2 years have already been accounted for during the past several quarters; we won't ever know these costs, but likely they have been significant.

Now, MS is also applying a retro-active 3-yr warranty. By doing so they are going to take an immediate charge stemming from refunds granted to folk that were charged for console repair during the past 18 months... likely a minority of users with RRoD issues overall, but a figure that is on top of the costs they have already incurred during the course of business during that time. On top of this they will be writing off inventory they feel has a greater cost associated with selling/distributing and potentially servicing/re-servicing at a later date. I take this to refer to their stock of refurbished and (seemingly constantly) recycled repaired units. Perhaps also brand new units they have identified as being particularly at risk.

In all of the above and the present load of repairs estimated for the present day, MS gives themselves a budget of ~$500 million to address the issue. With the extension of the warranty to 3-yrs, MS sets aside a further $500 million because it knows it has 12 million of these "at risk" consoles floating around, and now two-yrs extra liability coverage on each one of those should it decide to expire. They may end up not needing that much ultimately as it applies to this issue, or they may end up needing more, but at this time it is their best guess based on internal numbers.

 

To be clear again, that $500 million only covers their immediate present liability exposure due to the warranty extension; it does not include costs incurred due to MS-paid warranty servicing over the past 18 months. I imagine that this has been a significant figure in and of itself, and has been accounted for normally in the quarterly earnings during that time.

The costs will certainly be inclusive.

 

Great post Sis.

Yes, I was giving Microsoft the benefit of the doubt just because of this. Thus my post a month or 2 ago. The one Shifty so eloquently referenced above. At the time of my post people were suggesting up to 50% failure rate and that just seemed unimaginable. Without hard facts it was easier to side with Microsoft and chalk it up as user error or excessive exaggeration.

What about now? I'll admit that Microsoft's coming clean of the issue does make you wonder how bad it actually is. I'm still not sure it's as bad as some are thinking. I could for-see the failure rate maxing at 20%(maybe 25%), but anything approaching 50% and you'd think they just recall all the systems. Also, I've read most of Peter Moore's comments and he seems consistent in saying it's not systemic issue. If it had been then every system manufactured would have been effected. I'm sure we'll never know the full details till their next system is out and Dean Takahashi writes another book about it. LOL.

Tommy McClain