Microsoft Acknowledges 360 Issues, Extends Warranty to 3 Years

RamblinLonghorn writes "Microsoft has announced that they are extending the warranty for all Xbox 360s to 3 years. This appears to be entirely retroactive and that 'those who have already paid for such repair charges can expect reimbursement checks for the amount of their console repair.' It seems as though Microsoft is accepting the blame for the hardware malfunctions, but it is worth noting that this warranty modification only applies in the 'Red Rings of Death' situation."

Comments

Microsoft NEEDED to do this? No.

[avoisin]

I work for a high tech company that makes expensive hardware, far pricier than the xbox, and I've come to understand a lot more about the cost of warranties from the supplier end. Extending warranties is essentially a loss for the the manufacturer - you're essentially betting when what you made will fail. That's weighed against the cost of making more durable components and the cost that a customer would not buy your product in the first place.

When the 360 first came out, someone made a decision that beyond one year it would cost the company too much to repair the consoles relative to the increased sales than would be had by having a longer warranty. They also had to take into account the bad publicity that could (and did) occur.

I'll be pure engineer here - someone at Microsoft redid the formula, given the knowledge of failures that have happened since release. This time around, the math said that enough future sales would be lost to outweigh the cost of extending the warranty. It's really that simple. It's also interesting to note here that they didn't make it a lifetime warranty (20 years or something). They probably ran that formula too, and decided that the math tips the other way if you let it last forever.

So did they NEED to do this? If by need you mean "saving face", then no. Being the retrospective hero doesn't help anything, only in the sense that it might affect future sales.