Corporate VP and chief Xbox spokesperson outlines Microsoft's billion-dollar warranty extension--and how it will affect customers worldwide.
Earlier today, Microsoft stunned the game industry by announcing that it is extending the manufacturer's warranty for the Xbox 360. Instead of the 90 days the console came with initially, or the one-year warranty it was later upgraded to, now every 360 has a three-year warranty for the dreaded "red ring of death" error. The warranty covers all expenses and every console sold since the 360's November 2005 launch.
Though gamers are debating the motivations behind it, there's no debating that the warranty extension is unprecedented in game-industry history. It also isn't cheap. Just before revealing it barely missed its 360 shipment target, Microsoft announced it would take a $1.05 to $1.15 billion hit to its April-June earnings as a result "for anticipated costs under its current and enhanced Xbox 360 policies."
Shortly after the announcement, GameSpot spoke with Peter Moore about the recall. Besides being the corporate vice president of the entertainment and devices division of Microsoft's interactive entertainment business arm, Moore is also the Xbox 360's most public spokesman. However, instead of the bravado he displayed at Microsoft's E3 2006 briefing, the usually outspoken Moore was contrite, sounding genuinely apologetic as he explained the new 360 warranty--and its repercussions.
GameSpot: So, Peter, I hear you have some pretty major news for us...
Peter Moore: Alright, let me take you through what we're announcing. So, I don't have to tell you guys how strong the  business is, and I think you're going to see proof of that next week at E3. But before we go into E3, we want to make sure that we take care of something that has certainly been on radar screens around the world, and you guys have covered it, and that's the area of quality. We've had a number of Xbox 360 console repairs that have been unacceptable to us over the past few months. So, we've investigated the issue here in Redmond, and we've identified several factors, not just one, but several factors that can cause the general hardware failures indicated by the all-too-familiar three flashing red lights on the Xbox 360 console.
So, here's what we're doing about it. We've made improvements to the console itself that we believe will reduce the occurrence of these issues, and we're also implementing an enhanced warranty program to cover the general hardware failures that are indicated by the three red lights.
We're announcing today a specific warranty coverage that extends to three years for any console that displays a "three flashing red light" error message. So if the customer has a "three flashing red light" issue, we'll repair the console free of charge. Now, that's including shipping, for three years from the purchase date. So, whenever you purchased it, you've got a three-year warranty from that date for this particular issue.
On top of that, we're retroactively reimbursing any customer who paid for out-of-warranty repairs related to this error message. I want to be clear. I think you guys know this, this is not a safety issue for consumers, and what we're doing is a voluntary decision on our part. Obviously, there's a cost to this, and we're announcing this afternoon that we're going to take a $1.05 billion to $1.15 billion pretax charge to earnings for the quarter ended June 30, 2007, for what we believe are the anticipated costs under the current Enhanced Xbox 360 policies.
A final statement I'd like to make is we stand behind our products and are taking responsibilities to ensure that every Xbox 360 console owner continues to have a fantastic gaming experience.
GS: Well, that's absolutely phenomenal news for 360 owners worried about their consoles dying. But obviously a company of your stature doesn't take such moves unless something prompted it. You said there was a variety of factors, do you care to identify any of those?
PM: Not really. It's not really material. The fact of the matter is, as you guys know, and I know painfully well over the last few weeks with the e-mails that I've got, that we haven't done right by our consumers with this particular error. It's a hardware failure error. I don't have to explain to you guys what it is, but we're doing the right thing--at no small cost, obviously--but we believe this is the right thing for our consumers. We also believe that the majority of Xbox 360 customers are having a great experience, and it's important we take care of the people that we've been a little slack in taking care of in the last few weeks. This is to put things right. They're a loyal, passionate bunch--I don't have to tell you that--and we haven't lived up to their expectations recently. We need to change that.
GS: So just to be clear, this is retroactively affecting all Xbox 360s from the beginning production batch onwards?
PM: That's correct. If you've already had a "three red light" problem, and you paid us to fix it for you, we're going to give you that money back. And if you purchased one last week, or the week before, you've got three years of warranty to cover this problem.
GS: The announcement makes it sound like it's only for 360s purchased before June 30, 2007?
PM: No, no, that's our fiscal year. This is an Xbox 360 warranty enhancement program. So you get a three-year warranty and it covers the three flashing red lights. So even if you bought it on launch date, you get three years from then.
GS: Now, is this going to apply to all 360s being made going forward as well?
PM: Yeah, this is a warranty program. We've got to fix this problem, and it's not just a one-time up until this date we'll take care of the ones in the past. No, this is a three-year warranty effective immediately.
GS: Do you foresee you changing this policy any time in the future?
PM: Right now, no. We need to take care of people. Changing it doesn't take care of people.
GS: Now, the problems that prompted this thing, have they been mainly affecting regular Core and Pro 360 packages? Have the Elites been less often?
PM: I think that's fair to say. It's been the Core and the Pro that have been obviously the huge bulk of what we have in the marketplace. Obviously, we've got over 10 million sold through of these things, and as a result, we're seeing a level that's unacceptable to us of returns with the three red lights, and we need to do something about it.
GS: Well, it sounds like you definitely are now. But what about 360 owners who've been experiencing these problems for months, or even years?
PM: The only apology I can make to a consumer that's been affected is we probably should have been a little quicker. But they've got to understand the complexity of gathering the data and figuring out exactly what was going wrong. It's taken us a little while to put fixes in place and get global call centers all up and running. The good news is, we're up, we're running, and we're ready to go.
GS: Can you identify any hardware fixes in particular that you're using to remedy the problem?
PM: Not really. I'm the wrong guy to start talking about the complexities of technical enhancements to the Xbox . We've been watching and gathering data and trying to figure out exactly what this is, because it's not easy to pin down. But the team has been working on it, we have a lot more optimism now that what we've got going forward is going to cause less problems. But boy, we've caused problems, and we need to take care of it.
GS: Now, obviously this announcement is going to produce a very big response. What steps are you taking to kind of prepare yourselves for the onslaught of customer service requests you're going to get?
PM: It's a challenge for us because this is a global announcement, not just the United States. So, the teams have been readying. The interesting thing is, it's not easy to let a lot of people on the ground know of an announcement of this magnitude, for us to be able to ready our customer service centers around the world. The only thing I would ask is that consumers give us just a little bit of slack here over the next few days as we get ready to go. We've been training staff as we speak and making sure that we're up and running as fast as we possibly can on a global basis.
GS: Now, has this been prompted by any certain title? I know there's been reports of Forza 2 bricking systems...
PM: Nothing to do with software, guys, nothing to do with the titles. It's a general hardware failure, it's not a title. I know there's been some rumblings in the last two days about Forza 2, and I scratch my head at that one because that is simply not the case. This is a general hardware failure. That's when the three flashing red lights come up, and we need to take care of the hardware.
GS: How long can somebody expect to get a new console once they--once they submit a broken 360 for repair?
PM: It's going to be weeks not days, but as I say. If they just have a little bit of patience here, we're trying to do the right thing. It is a global roll-out, and as soon as we humanly can, we'll get them their new consoles.
GS: So, you guys, you mentioned call centers. Have you also set up new repair centers to deal with this?
PM: Not necessarily, I think we've got the infrastructure we got in place, but this is a very large policy change, and it's going to require agent training and stuff of that nature, and repair and refurbishment centers are ready to go. So, it's our goal to make this as painless and as fast as we possibly can for the consumer.
GS: Will the number of problems go down in new production batches of 360s?
PM: That's certainly our goal. We continue to make announcements and improvements as you always do with hardware as you go into the cycle, and I think we're already going to see some better results, certainly starting with the Elite. So, but no matter what happens, the key here is if a problem does occur, we're going to take care of you. OK?
GS: Yeah, that's pretty comprehensive. It's rare for a company to be this forthright about their missteps, so you'll probably get some good feedback on this...
PM: Yeah, I hope so. The only apology I can make, if we've caused anybody any pain, then hopefully we can do right by them as quick as we possibly can.
i've had my xbox replace 3 times already buts its cool cuz i can play my ps3s but i still ilke the ps3 better but both of them are great consoles that has high remarks
But its still an awesome system with xbox360 only games like naruto the broken bond, forza motor sport 2 and more.
well at least the 360 lives up to it's name. From Microsoft, to you the gamer.... right back to Microsoft. LAWLZ. Suprised something like this wasn't posted on failblog.org.... hmmm...
Another reason I will go by Sony. Only a fool would go for a system with such a high failure rate, that's a sad fact. This will sound like a fanboy statement, but it is truth. At this point, where it's main opposition has virtually the same games, a built in blue ray player, and a virtually non-existent failure rate, the choice of console should be obvious, but so many fan boys rush to protect their console from hate. Sure, the PS3 may have a similar market place (Although having an online market place has been standard for a while now) that was obviously inspired by XBOX live, and an achievement system that was also inspired, but I'd much rather go for a console that I wouldn't need to absurdly replace 4 times. Why don't they make a total revision of the console, WHY HAVEN'T THEY? It's an actual design mistake, thats what it is. First change it from that stupid PC shaped design, into a design that allows much better air circulation. Then use a different motherboard, and have more fans. There problem solved. But they wouldn't do that, it's so cheap making 360s, since the technology is so old, (the games just look goo since they're optimized) they could make millions easy, for a relatively small cost. 360s are cheap, and easy to make, Microsoft is NOT losing that much money replacing them.
did any1 notice that every paragraph ends up with a variation of "we gona take care of" in some way or another..... come on peter .. we get it!!! you gona take care of me, even though i don't own a 360 ..
well...24 days playing and guess what.. TRL!!! damn! i'm calling noooooow! does anybody knows if this happen to the elite version?
I don't understand why some of the people on here are acting like the end of the world has come when something new hits the streets, technology wise, and reports are made about problems, and then on top of that the company doesnt just say theyll repair it for free, but refunds the money for those who paid for the repairs, CRY RIVERS and say THE 360 IS CRAP, SHOULDNT HAVE BEEN RELEASED bla bla bla. Cry yourself a RIVER! Its like judging an NFL QB by their first couple of seasons. IT CANNOT BE DONE!! They could have 2 crappy seasons, and then have 1 great season, doesnt mean that they are bad or good! its not that hard to understand you people that whine n b**** and moan about how MS screwed people over. Its the way technology works. How many times have you had to get a car repaired?? NUFF SAID!!!! I am very greatful to have bought something from a company who isn't saying, 'We offer an extended warantee for $100, and we offered it to you at the time of purchase, there really isn't anything we can do for you"......if i am wrong, then that is your personal opinon just like this is mine, but for all you 25 year olds and older, i am pretty sure y'all understand what i am trying to get at, MATURITY!
i think ether they really dont know wut the problem is (hard to believe with such a large company) and we are a part of this sort of console beta testing as they try to narrow down the problem. OOOOOOOR they know exactly what they CAN do but it would require a recall or an HUGE change to the console build, hardware, even case maybe to do that they are hoping to narrow down the failure rate instead
My 360 JUST CRAPPED OUT this past weekend. I remember having the TRL error about a year ago, shortly after I bought the system. I was able to restart it with "unplug" advice from MS. But no-go this time. I had no idea about the 3 year warranty and change in policy until Sunday afternoon when I called. Waiting on a shipping box, which should arrive via UPS tomorrow then out to MS for repair/new system. So, my guess is if you have not gotten the TRL error yet, get ready...
you havent heard of as many problems because the ps3 hasnt been out for nearly as long as the 360. duh.
My Xbox360 is in the repair center now. Again. For the fourth time. I'll be on my 5th Xbox360. I love the Xbox360, and its games, but if it is in the shop every two months (no exaggeration), then what good is it? I'm strongly considering a Playstation 3. I haven't heard of nearly as many problems. Microsoft rushed the hardware, and us gamers are paying for it. But I'm glad MS is at least doing something, but it still is annoying not playing my console for weeks. :(
And everybody with a non red-ring of death related problem is screwed. That means all the dirty disc errors, and all the unexpected shut-downs, game freezes, and console overheats that don't result in the red-ring. Sure, it's great that everybody who bought an extended warranty gets a refund. And everybody who paid for repairs and had a red-ring problem are refunded. And the warranty is extended to 3 years, but last I checked, there was still a class-action lawsuit filed on them for all this crap. Actually fixing the problem FTW.
@dadieo I never thought of that. This announcement really screws over the people who bought the infamous 'extended warranties' that are 'pimped so hard' in stores. I know that those 'warranties' aren't cheap hence, this is a bitter pill. If Microsoft would have made the console MUCH BETTER to begin with, they wouldn't be having to take a hit of a BILLION dollars against it's earnings. I bet the shareholders are happy that engineering incompetence has cost them a few bucks (down the road that is).
THERE 0NLY D0ING THIS S0 WHEN THEY C0MEOUT WITH A NEW SYSTEM IS AH C0UPLE YEARS THAT THEY D0NT L0SE BUYERS
Tavurvur I agree with you 100% Serious. The 360 is a lemon and he definitely avoided revealing the specific hardware issue and I also think we should be told what it is. --------- What for? The diod A125 overheat from time to time, blabla? What would you do about that? Just be happy that your warranty has been expanded to 3 years for those problems. That's more than enough. We don't get that kind of things often. That said my x360 was bought at launch and I never had that problem. So i guess I can't understand the feelings of those who have been strugling with that problem.
This comes a little too late for all the people who purchased performance service plans (PSP) from point of sale. These 3 year plans cost $89.99 (CDN) plus taxes, just for a piece of mind against all the problems that happened to consumers shortly after the release of the new xbox 360. The crash of the xbox 360 at initiation created a whole new influx of money to Special Risk Insurance carriers, sure would be nice to get this expenditure back?
ummmm so if the console does not have the three red lights they wont fix it? cause my console it has no three red lights but it is messed up the tray gets stuck inside the 360 and once i take my game out the outline of the tray is imprinted on Disc sooo yea no more 360 i guess
I agree with you 100% Serious. The 360 is a lemon and he definitely avoided revealing the specific hardware issue and I also think we should be told what it is. Though reading this article has given me some peace of mind about my 360, waiting to be sent in for repair (3 lights) for the second time, my opinion of Microsoft has been tarnished after all these years of being a stalwart.
Never mentioned if Elites are safer... Sounds like they are getting' Hell over the phones and are trying to do some back tracking.... Hope my Elite doesn't crap out... Wonder if you get to keep you HDD....
Of course there were financial motivations behind this, but I still can't help feeling some love for Microsoft now.
Sound to me that Microsoft is trying to avoid a recall. The number of Xbox 360 complaints have gone as high as 40% according various articles on the internet. I think a product recall is necessary. Microsoft knew about this problem since its release and has done nothing about it. Now with many of those angry consumers starting talks of a class action suit against Microsoft. They have given us this offer. But remember that this "generous" offer is only for the "3 red light" error and not the solid red light problem. Moore is very specific about that. Plus was it me or was he defensive about tell us the actual cause of the problem or what was being done to fix it. Don't Xbox owners have a right to know what was wrong with their systems? The 360 is getting close to 2 years old so the warranty only covers them to November of 2008.
I honestly think this is an absolutely key move. This was the only chink in the chain for Microsoft right now
I just hope that they figure out exactly what the problem is and fix it. They've had thousands of 360's with hardware failures...you're telling me that they can't find the exact problem......I think they can.
it's about time, but why don't you also figure out how to fix your problems before you send out a few million more to the public?
This is excellent news for me - but what about the people who recently bought an extended warranty? Will they get a refund?
Xbox 360s are too unreliable compared to its rivals. However slapping a 3 year warranty will help improve sales. I haven't got a 360 mainly because of it dying, my original Xbox broke 3 times! So i never had trust in the 360. But a 3 year warranty will help me think about buying one.
............. Ive seen enough to see there are idiots on BOTH sides of the console argument... StarFox-Elite just happens to be the latest... and Monrovian007, you DO realize that in a way Microsoft copied Sony by making their system in the first place, right?
Bold and classy move on MS's part. Sony survived the PS2's massive hardware failures and I hope MS does the same. It's nice they are actually creating a new warranty program to cover everyone affected. I really appreciate the competition and innovation MS has brought to consoles and I hope they continue to do so.
Who the heck marked my posts down? Yeah MS have the guts to admit there is a problem, they GIVE YOU YOUR MONEY BACK NOW! Sony charged me £50 to get my PS2 fixed when it broke suspiciously 1 MONTH AFTER THE WARRANTY RAN OUT... and theres proof, they were taken to court for it because it became that blatantly obvious that they were conning the world with everybody's PS2 breaking if it was made before a certain year. Have we all forgotten that? I know I haven't because its happened with all my friend's PS2s...disc read error...loud whirring noises... They won't even admit to that. MS might have done the same thing and they suffered the consequences and made up for it, they had the common sense to make it easier on themselves... And again I'll say it, they STOLE the idea of a motion sensor in a controller, they stole the idea of a vibration mechanism for Dualshock controllers, they were taken to court for that and a man actually had SIGNED and official proof that he made the idea half a decade ago and was given no profit by sony. They only put a live system up because MS did, and don't worry if your ps3 hasn't melted into the ground yet, oh it will after a year or two, just like PS2s broke just after the warranty...
I want to restate what somebody said before ... This is bad for those who own a 360 as this shows how rushed the console was to market and how not enough product quality testing was done. You may not feel it right now but you would definitely feel the hurt once 3 yrs warranty is up.
Fortunately I have had no problems with mine. I think the 360 is a good machine generally but compared to my PS3 its noisy and generates some serious heat !
I had two XBOX 360s. One got the ring of death and the other had a bad CD tray. I think the XBOX is built cheap and this is a way that Microsoft can cover it's rear. Why figure out what is honestly wrong with the systems when we can just extend the warrenty work. Microsoft should try placing some money in its cheap hardware so the thing doesn't sound like a jet plane taking off also.
I got one at launch lasted 15 months playing it 4-5 hrs a day it died but I got the warranty from best buy the replacement was a dud out of the box so I waited and replaced it with a elite which has had no problems. I did play 5-6 hrs strait the night my 1 st one melted down ty viva pinata so I got rid of that game My son also got one 2 weeks after launch last summer it got the 3 rings of death and sent to MS for repairs its benn fine since but He uses his like a madman! All this talk about a sega genesis still working and my famicon jams is irrelivant 8 bit cartridges how many of your NES still work? and what are you playing ???? I mean even the wii graphics are garbage by comparison to the 360 and PS3 Ill take a 3 year on my PS3 if sony has the balls 1 yr out of the box and my bluray stops reading how much will that cost to fix $149.00???? more I here for the games and yes I have all 3 systems I love the wii too. and it should last 5 x longer based on design and heat! thermodynamics MS should have made a better product or a cooler more quiet one well it came out a year earlier and still looks as good or better then PS3 the biggest complainers in here will never by a MS product anyway the just preach thier system is best and only play it. if its soo good why are you here No good games to Play?????
It's good to see that Microsoft is finally taking this problem seriously. I've not had a failure of my 360, at least not yet, but knowing I can get it fixed for free for more than two years yet definitely takes a load of the mind.
Reminds me of the original xbox my power supply fried 2 days after my warenty was over and they wanted 100 bucks to get it fixed (while using the recall for power cords to fix this problem) and i don't plan on buying the 360 until i stop hearing about people getting all these errors or hardware failure.
Well, I think that's a great move by MS. Takes a lot of guts to finally admit that there's a problem with the hardware, and then bump the warranty an additional two years and retroactively cover all 10+ million units sold. My 360 is still running like a champ, but it's nice to know that I don't have to worry about hoofing the repair bill should it give out on me. Nice work Microsoft, now if you could get some quieter disk drives to put in the future consoles my only complaint will be dealt with. P.S.: I don't really think it's a hardware problem in the term of faulty materials, but the fact that it's basically a full personal computer stuffed into a tiny box without much in the means of component cooling. My 8800 GTX probably has a better cooling solution than the 360 and it still runs at some amazingly high temperatures (nearly 150 degrees). MS sold a high-performance energy hogging product to the public who in turn run it for 10+ hours on end without any times to cool down, of course there are going to be component failures at one point or another. I generally shut mine down after a few hours of play just to let it cool down a bit since it basically turns into a space heater after playing a taxing game. About 17 months later, still no problems, cranks right up and still reads everything. If it weren't for all the problems around I'd say it's an extremely well-built device, but it's probably boiling down to consumer's care of their consoles and without proper cooling in place, MS has to take the blame.
People stop talking about Sony!!!!!! They copy everyone!!!!!! First they copied Nintendo on the motion sensor controllers and then Microsoft on the whole Xbox Live thing and now they are going to start adding achievement type things to their games!!!!!!!! That is a complete rip-off of Xbox 360 games!!!!!! I HOPE SONY GET THEIR ASSES SUED!!!!!!!!!! Be original for once Sony!
Wow. Basically this is MS admitting they are selling a faulty system and are not sure how to fix it. Amazing. One question though; if your system dies two years after purchase, do you get one more year of coverage or will they cover the replacement for 3 years? Nice of them to take responsibility for their blunder, but how can they keep selling these things when they know they are faulty going out the door?
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