Large impact likely from RROD issue
This entire RROD issue is very interesting. The possibility of a major consumer backlash against the 360 seems very real. It is a mistake to assume that the majority of potential consumers of a next-gen media box out there do not care about the quality of the device. They are not going to make the same value judgement that many addicted gamers do. In fact, after browsing customer reviews of both PS3 and 360 products on Amazon, a huge disparity is evident, with many previous 360 owners warning others to stay far away from this product. I'm sure many will disagree, but I see this as very indicative of a major consumer backlash. The anonymous insider, whose interview began this thread, shows himself to be very knowledgable of his field, and so I feel is a credible source.
First, MS has under resourced that product unit in all engineering areas since the very beginning. Especially in engineering support functions like test, quality, manufacturing, and supplier management. There just weren't enough people to do the job that needed to be done. The leadership in many of those areas was also lopsided in essential skills and experience.
Second, MS was so focused on beating Sony this cycle that the 360 was rushed to market when all indications were that it had serious flaws. The design qual testing was insufficient and incomplete when the product was released to production. The manufacturing test equipment had major gaps in test coverage and wasn't reliable or repeatable. Manufacturing processes at eall levels of suppliers were immature and not in control. Initial end to end yields were in the mid 30%. Low yields always indicate serious design and manufacturing defects. Management chose to continue to ship anyways, and keep the lines running while trying to solve problems and bring the yields up. Whenever something failed and there was a question about whether the test result was false, they would remove that test, retest and ship, or see if the unit would boot a game and run briefly and then ship. 360 is too complex of a machine to get away with that.
The insider's motivation is clearly explained in the interview: he views Microsoft's behavior as being very unethical, and that the management deserves to have their face in the mud for how they have regarded the consumer. That the product has had such a sustained high failure rate is very telling of a poorly designed system- if it wasn't so poorly designed, they would have fixed it long ago. So, the con game here is being called- the design failure of the 360 is very telling of their corporate attitude. I don't think Microsoft's potential customers are going to overlook this problem as their non-addictive status allows them to be more objective in their purchasing. As a consequence I'm betting that the 360 will largely stagnate in 2008. This is not something I would have expected before looking into how extensive the manufacturing problems are.
I also find this situation very disappointing, as I've been impressed with Microsoft's performance in helping to produce compelling content, but I'm afraid they've let us all down with a very substandard product. I wonder if Bungie's departure is related to this.
What Microsoft should have done is to wait until the hardware was ready. If they did that, who knows, maybe they would have had a more reliable and quieter machine that included an HD-DVD drive, and just maybe they would have won the HD war with their superior software?
If Microsoft succeeds, will they not see the benefit of their behavior, only to continue to do it in the future? How much has Window's security issues cost civilization? How much of a problem has IE caused the web? Microsoft clearly sees its behavior as rewarding as it continues to hold to the same philosophy: grab the market early at any cost, and fix the problems later.
As for 360 owners, for those who choose to stick with it, I totally understand the value you receive- if I had the time and inclination, I might just put up with a few returns myself.