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Appeared on: Friday, July 06, 2007
Defective Xbox 360 Consoles to Cost Microsoft a Billion Dollars

Microsoft announced Thursday it expected to spend more than a billion dollars fixing flawed Xbox 360 video game consoles after logging what it called "an unacceptable number of repairs."

Twenty months after the gaming console's launch, the US IT giant conceded that a large number of Xbox consoles had been returned for repairs stemming from "general hardware failures".

Although the company would not disclose how many consoles had needed mending, it said that repairs, compensation and warranties could cost as much as 1.15 billion dollars.

It also said it was expanding the warranty for purchasers.

Microsoft discovered console flaws that cause hardware failures signaled by three flashing red lights.

The problem is one of Xbox 360 design, not something caused during assembly, according to Microsoft.

Microsoft has offered to repair or replace problematic Xbox 360 consoles, extend Xbox 360 warranties from one to three years and has offered to reimburse those who bore the cost of fixing the consoles.

Microsoft said the design flaw had been corrected so that future Xbox 360 consoles should be free of the problem.

The expected expense of the program will be represented by a charge of 1.05 to 1.15 billion dollars in the company's financial quarter ending June 30, 2007.


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