Gamers, Octogenarians Beware of the Xbox 360

Late last August, I paid a visit to my 84-year-old great aunts, Eleanor and Rosalie, as I do every year to bid my farewell before leaving for school—and to reset the clock on their VCR, which of course is inevitably blinking year after year. As I was detailing the finer plot points of The DaVinci Code to Aunt Eleanor, she stopped me and asked if my “Nintendo” had “exploded” yet. My Aunt Eleanor knows video games about as well as she knows linear algebra, so I had to ask where she had heard about the tendency of Microsoft’s Xbox 360 to overheat and break down at alarming rates. When she told me she saw it on the local news, that’s when I realized that Microsoft had a serious problem on their hands—the Xbox 360 was about as reliable as the Pinto—and everybody, not just the internet nerds who kept track of these things, knew about it.

It was first suspected that the Xbox 360 had a bad case of the flu almost immediately after its November 2005 launch, as many launch units broke down within a few hours of gameplay time. The prominent “ring of light” display on the front of the console, which the system uses to indicate when controllers are wirelessly connected to the machine, would blink with three red lights in what has become the “Blue Screen of Death” for the next generation. Three red lights meant instant and irrevocable death for the young, fledgling console. Most felt it was just launch jitters, but when the problem didn’t vanish in 2006, it became serious, and word began to spread.

The problem didn’t vanish in 2007 or 2008, either. Gamers went through Xbox 360 after Xbox 360 in a process known to gamers as “coffin-ing it,” whereby Microsoft would ship a cardboard box to your house and you’d send back your Xbox 360 in the box to have it repaired. After numerous complaints that Microsoft was sending completely different, refurbished systems to Xbox owners instead of their original system, gamers became even more dissatisfied with Microsoft’s customer service.
1up.com reported on one gamer, Justin Lowe, who went through as many as 11 different Xbox 360 consoles—bizarrely enough, he stayed loyal to the brand instead of simply demanding his money back. Through much of 2007, Microsoft refused to admit there was anything abnormal about the Xbox 360’s inclination toward giving up the ghost.

Microsoft insisted there was no problem with the design of the system and that the failure rate was within normal limits for all of 2006 and 2007. In order to avoid any sort of legal culpability, Microsoft had to deny the findings of many technical hobbyists who tore apart the system and discovered that a series of clamps that held the system’s internals together were often braced too tightly, allowing heat to warp the motherboard and break the electrical soldering, causing the machine to fail at disturbing rates.

Reports by applied market intelligence firm iSuppli claimed that Microsoft spent a stunningly low $6.10 on manufacturing the Xbox 360, compared to $40 dollars spent by Sony on the PlayStation 3’s 60GB model. The low manufacturing costs were probably the major reason for why the Xbox 360’s failure rates were so abnormal. Why would Microsoft spend so little on probably the most important part of quality insurance? To understand this question requires a slightly deeper understanding of how the gaming industry works.

Microsoft sells the Xbox 360 at a loss with the intention that they will eventually make back the lost revenue by selling software and services to consumers who buy the machine. Microsoft absolutely took a bath on the original Xbox hardware—financial reports from Microsoft’s Home and Entertainment Division revealed Microsoft lost a staggering $4 billion on the Xbox project through September of 2005. This performance could not be repeated for the Xbox 360, so corners had to be reasonably cut. Unfortunately, since the various components of the machine were so incredibly high-tech and expensive, Microsoft looked elsewhere to cut the corners. Though Microsoft will absolutely deny any culpability, the proof is in the pudding, and 11 failed Xboxes do not lie.

Rumors leaked out in early 2007 that the Xbox 360’s failure rate was as high as 30 percent, well above the normal 3 to 5 percent for consumer electronics. As the media picked up on the story, threats of a class action lawsuit against Microsoft emerged from the ether. In a surprising reversal of corporate policy on the matter, Microsoft decided to extend the warranty of the machine to a very generous three years up from the standard 90 days on June 5. It cited that its actions were prompted, “as a result of what Microsoft views as an unacceptable number of repairs to Xbox 360 consoles” a move that still fails to admit any fault in the matter but should at least placate consumers for the time being. This cost Microsoft an estimated $1.15 billion.
It’s still unclear if the problem with Xbox 360s has been completely fixed. Microsoft has cited improvements in manufacturing technology as the fix for the Xbox’s flu. One thing is absolutely clear, though—Microsoft’s handling of the situation has been absolutely dismal.

I could tell things had gotten particularly bad when Aunt Eleanor managed to discover there was a problem for the beleaguered hardware company. Where Microsoft looked to cut corners, ultimately it ended up paying the ultimate price—the trust and confidence of consumers worldwide, in addition to the billions of dollars it will cost to fix this problem. I’d be surprised if anybody—especially students on a budget—jumps into the pool of the next Xbox version before they are assured the water is fine.