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Thursday, November 24, 2005
Microsoft Admits Xbox 360 Problems

After receiving a huge promotion from the press, buyers of the Xbox 360 in N. America say that they have experienced some issues when playing specific games.

Microsoft did not deny the promlems but said that they are "isolated".

"We have received a few isolated reports of consoles not working as expected," Microsoft spokeswoman Molly O'Donnell.

Enthusiast Web sites such as as well as Microsoft's own Xbox Web forum on Wednesday carried postings from Xbox 360 owners reporting that some systems had crashed during regular play as well as during online game play using the Xbox Live service.

Problems included screens going black and the appearance of a variety of error messages. In addition, the console has been reported to crash, possibly due to overheating issues attributed to the console's hard drive.

O'Donnell, who declined to say how many reports the company had received, said calls represent a "very, very small fraction" of units sold. The number of calls was not unexpected, she said.

"With any launch of this magnitude, you're bound to see something happening," she said.

O'Donnell said the best way to resolve the issues is to call 1-800-4MY-XBOX for trouble shooting. If that does not solve the problem, she said, Microsoft will repair or replace the unit.

Despite the issues, Microsoft corporate vice president Peter Moore has given the first firm indications of the company's sales ambitions for the Xbox 360 over the coming year, which see ten million consoles being shipped by the end of 2006.

Xbox 360 will follow up on its sell-out US launch with a European launch next Friday, December 2nd.

Cost estimation of the Xbox 360

In related news, a dissection of Microsoft's new Xbox 360 video-game console conducted by iSuppli indicates that IBM silicon is a key factor driving the cost and functionality of the product. But according to the iSupply analysis, Microsoft may 'losing money on Xbox 360'. The company's analysis of the cost of parts inside the game console resulted in an estimate of $525, far above the retail price.

IBM designed and co-manufactures the custom microprocessor that powers the Xbox 360, according to iSuppli, adding that the microprocessor is a triple-core PowerPC that runs at a frequency of 3.2GHz. At a cost of US$106, this single part accounts for 20.2 percent of the total Bill-of-Materials (BOM) cost for the Xbox 360 Premium, according to preliminary findings from the research firm. The IBM chip and other integrated circuits in the Xbox 360 total an estimated $340 per console, said the firm.

Other key semiconductors in the Xbox 360 include the Graphics Processing Unit, the memory and a southbridge I/O controller, noted iSuppli, adding that the GPU, designed by ATI Technologies to provide groundbreaking High-Definition (HD) graphics, costs an estimated $141, including embedded DRAM from NEC.

Factoring in costs for the hard disk, the DVD drive, enclosures, the Radio Frequency (RF) receiver board, power supply, wireless controller, cables, literature, and packaging - the total BOM cost for the Xbox 360 Premium reaches $525, well above the retail price of $399, according to the research firm.

If the teardowns are correct, it's clearly not what the world's largest software maker had intended for the Xbox 360.

"We're making money, not much money but we are making money," said Yoshihiro Maruyama, executive officer and general manager of the Xbox division of Microsoft Co. Ltd., Microsoft's Japan division, in an interview with IDG News Service in September this year.

"It will get cheaper over time. As we produce more the price will go down," he added.

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