MS Extends Xbox 360 warranty

Ever since Xbox 360 hit the market the gaming and video console has had a growing reputation of having multiple errors. Unnamed employee’s at some of the biggest American dealers recently told PCWorld.com about an error rate between 25 and 33 percent. Microsoft previously claimed this rate to be within industry standards (3-5%).

A few days ago Microsoft Corp. announced that it will expand its global Xbox 360™ warranty coverage (Listen to the Webcast). Any Xbox 360 customer who experiences a general hardware failure indicated by three flashing red lights will now be covered by a three year warranty from date of purchase. All other existing Xbox 360 warranty policies remain in place.

As a result of what Microsoft views as an unacceptable number of repairs to Xbox 360 consoles, the company conducted extensive investigations into potential sources of general hardware failures. Having identified a number of factors which can cause general hardware failures indicated by three red flashing lights on the console, Microsoft has made improvements to the console and is enhancing its Xbox 360 warranty policy for existing and new customers.

Not surprisingly Microsoft will take a $1.05 billion to $1.15 billion pre-tax charge to earnings for the quarter ended June 30, 2007 for anticipated costs under its current and enhanced Xbox 360 policies.

The good news is that any customer who has previously paid for repair expenses related to the three flashing lights error message on the Xbox 360 console, Microsoft will retroactively reimburse them.

According to News.com Microsoft didn’t manage to reach their expected sales figure of 12 million units. However after 11.6 million units sold the financial director, Chris Liddell, still believes Microsoft should be satisfied.

I suppose announcing this extended warranty coverage doesn’t hurt the sales figures either. Smells like a clever marketing campaign to me, and they even get (take) a tax reduction while running it…

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