Retailers Estimate Xbox 360 Failure Rate High as 33 Percent
By several metrics, the Xbox 360 is the most successful console so far of this generation. Despite the startling pace of the Wii, the Xbox 360 still has the most consoles sold worldwide and the longest list of games and exclusives. For a gamer looking for online-enabled high-definition gaming today, the Xbox 360 appears to satisfy those needs.
One often overlooked factor when considering a console purchase is reliability, an area that is becoming apparent where the Xbox 360 falls short. Anecdotal evidence is heavily pointing to Microsofts latest console as being significantly more prone to failure than what consumers are accustomed to.
Microsoft has said before that its Xbox 360 failure rate falls within three to five percent, what it believes to be well within industry standards. Internet reports from Xbox 360 owners, however, suggest that the failure rate is much higher than that.
In an effort to gain a more accurate picture of Xbox 360 failure rate, DailyTech decided to poll retail outlets that sell the Xbox 360 and with it the option to purchase an in-store extended warranty. Out of all Xbox 360 extended warranties sold, we wanted to know how many were claimed by consumers with defective consoles, thus giving us a more accurate failures percentage.
After contacting several retailers from various regions in North America, the responses were unanimous: the Xbox 360 is the least reliable gaming console in recent history. Current EB Games or GameStop employees who offered information did so under strict anonymity, as it is against company policy to reveal such information to the public. Furthermore, our sources confirmed that EB Games revised its Canadian warranty policies during early 2007 for consoles solely due to the failure rate of the Xbox 360.
EB Games held conference calls for its Canadian stores informing them of the new policy changes and revealing alarming failure rates of the Xbox 360. The real numbers were between 30 to 33 percent, said former EB Games employee Matthieu G., adding that failure rate was even greater for launch consoles. We had 35 Xbox 360s at launch I know more than half of them broke within the first six months (red lights or making circles under the game discs). Two of them were dead on arrival.
Interestingly, Microsoft has acknowledged that the initial batch of Xbox 360 consoles made during the launch window suffer from below average reliability. In response to an overwhelming defect rate of launch consoles, Microsoft agreed to repair all machines manufactured in 2005 free of charge, and issue a refund for those who already paid for repairs of launch units up until January 1, 2006.
The three flashing red lights commonly referred to in gaming communities as the Red Ring of Death is a sign of an Xbox 360 hardware failure. The sign is apparently common enough that Microsoft has added an option to its 1-800-4MY-XBOX support line that names three flashing red lights specifically.
As a result of the high failure rate of the Xbox 360, EB Games corporate nearly doubled the prices of its one-year, over-the-counter warranty. While the previous warranty would give a customer a brand new console in exchange for the broken one, the new policy now states that the customer will receive a refurbished console instead. The move was made because it was becoming too costly for the retailer to give the customer a brand-new machine, which still carries a store cost close to the MSRP. The price increase and policy change wasnt exclusive to only the Xbox 360, however, as it also applies to all other Sony and Nintendo consoles sold.
The failure rate nearing a third of all Xbox 360 consoles was found at other retailers too. A
Best Buy customer service department manager, who wished to remain unnamed, said that failure rates for the console were between a quarter to a third of all units sold.
We see a ton of [Xbox 360s] come back all the time. We strongly push our customers to buy our service plans no matter what they buy, but it is especially important for them with the Xbox 360, said the manager. Its a lucky thing for us that Microsoft extended the factory warranty to one year, because we were having a hell of a time dealing with the launch units. Now we dont have to deal with those broken [Xbox 360s] until their second year, for those who have purchased the two year plans.
In late 2006, Microsoft boosted the warranty of all Xbox 360 consoles to one year, up from 90-days previously. For gamers who are out of warranty, however, a replacement or repair will cost Xbox 360 customers $140.
When compared against other systems, the Xbox 360 is failing at higher rates than its current competitors and predecessors. Former EB Games worker Matthieu G. said that the failure rates for all other consoles were not high enough for the retailer to consider revising its policies, and guesses that that most other console systems have a failure rate of less than one percent, including the PlayStation 3. Another EB Games manager, when asked if the store warranty was worth it, conceded that in the hundreds of Wii units sold at that location thus far, zero have come back as defective.
Despite the overwhelming evidence that the Xbox 360 is a relatively unreliable games machine, Microsoft officials refuse to comment on its failure rate. Peter Moore, VP of Microsofts entertainment division, said to the Mercury News, I cant comment on failure rates, because its just not something its a moving target. What this consumer should worry about is the way that weve treated him. Yknow, things break, and if weve treated him well and fixed his problem, thats something that were focused on right now. Im not going to comment on individual failure rates because Im shipping in 36 countries and its a complex business.
Similar questions regarding the Xbox 360 hardware met with the man responsible for the design of the console, Todd Holmdahl. He too sidestepped the issue with the Mercury News, saying, I would say we dont have a high defect rate. The vast majority of people are really excited about their product, and that we are targeting profitability for next year.
Asked differently about whether or not the Xbox 360 falls into the normal three to five percent return rate, Holmdahl said, We dont disclose the actual number, and We dont comment on that.
WOOO! We scored a Wii!! So far we are having a blast playing Wii Sports and Wii Play (needed that extra controller). Question for the experts.... does the memory card need to be a Wii SD card for gaming or will any SD card work? 
