GameStop stops selling Xbox 360 warranties?

In July, Microsoft admitted that the failure rate on Xbox 360 systems was unacceptably high and suffered a $1.05 billion loss to cover repairs for customers experiencing the "Red Ring of Death" error on their systems for three full years.

Now, it appears one of Microsoft's retail partners has also apparently found the system's failure rate unacceptably high. Web site Gamers Reports has posted what it claims is a GameStop internal e-mail telling employees that, "effective immediately, GameStop will no longer offer PRPs [product replacement plans] on new, refurbed, and used Xbox 360 systems." According to the report, said e-mail was circulated to store managers nationwide last week. The employee who passed along the memo said the chain is losing too much money on the program, although it will honor existing PRPs.

Microsoft's own warranty currently covers Xbox 360 systems for one year from the date of purchase on general defects (two years in some countries), while systems experiencing the "Red Ring of Death" error are covered for three years.

A GameStop representative had not returned GameSpot's request for comment, while calls placed to individual stores drew mixed responses, suggesting not everyone got the memo. The e-mail also asked employees to prevent customers from playing in-store kiosks of Super Mario Galaxy for extended periods of time and stressed the need to abide by the 40GB PlayStation 3's November 2 street date.