[LINK] Xbox repair bill tops $US1bn

[Bernard Robertson-Dunn]

<brd>
Looks as though Microsoft's hardware is designed to the same high 
standards as its software.
</brd>

Xbox repair bill tops $US1bn
Jessica Mintz in Seattle
July 06, 2007
Australian IT
http://www.australianit.news.com.au/story/0,24897,22027422-15306,00.html

MICROSOFT said it expected to spend more than $US1 billion to repair 
widespread hardware problems in its Xbox 360 video game console after a 
large number of them broke down.

Microsoft said it would extend the warranty on the Xbox 360 to three 
years after too many of the consoles succumbed to "general hardware 
failure," but the company provided few other details about the extent of 
the problems.

"We don't think we've been getting the job done," Robbie Bach, president 
of Microsoft's entertainment and devices division said. "In the past few 
months, we have been having to make Xbox 360 console repairs at a rate 
too high for our liking."

Mr Bach said the company made some manufacturing and production changes 
that he expects will reduce Xbox 360 hardware lockups, but he declined 
to identify the problems or say which others might remain. Microsoft 
said it will record a charge of up to $US1.15 billion ($1.35 billion) 
for the fourth quarter to cover the additional costs associated with the 
warranty extension.

Matt Rosoff, an analyst at the independent research group Directions on 
Microsoft, estimates that Microsoft's entertainment and devices division 
has lost more than $US6 billion since 2002.

Microsoft has written down larger amounts in the past - more than $US10 
billion in the late 1990s related to investments in telecommunications 
companies, and more than $US5 billion related to antitrust issues - but 
a $US1 billion write-down for one division in one quarter is significant.

"It suggests the problem is pretty widespread," Mr Rosoff said.

Microsoft will pay for shipping and repairs for three years, worldwide, 
for consoles that experience hardware failure, which is usually 
indicated by three flashing red lights on the front of the console, 
something gamers sometimes refer to as "the red ring of death." 
Previously, the warranty expired after 1 year for US customers and 2 
years for Europeans.

Microsoft also will reimburse the "small number" of Xbox 360 owners who 
have paid for shipping and repairs on out-of-warranty consoles, Mr Bach 
said.

In June, bloggers speculated that the Xbox 360 return problem was 
getting so severe that the company was running out of "coffins," or 
special return-shipping boxes Microsoft provides to gamers with dead 
consoles. "We'll make sure we have plenty of boxes to go back and 
forth," Mr Bach said in an interview.

Microsoft's entertainment and devices division reported an operating 
loss of $US315 million on $US929 million in sales for the three-month 
period that ended in March.

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Regards
brd

Bernard Robertson-Dunn
Sydney Australia
brd at iimetro.com.au