A History of the Xbox Red Ring of Death Fiasco

VentureBeat has a lengthy story about the situation surrounding the Xbox 360's "Red Ring of Death." It starts with the developmental phases for the 360, looks at the marketing decisions that drove Microsoft to aim for a release ahead of the PS3, and talks with sources and engineers within Microsoft about what could have been done to prevent the problems. Quoting: "Leading up to the launch in the fall of 2005, the number of defective units would soon grow to tens of thousands. Any other consumer electronics company would likely have postponed a launch with such low yields. But Microsoft had more money in the bank than anyone else. The decision this time would fall to Bach and Moore. The costs of launching with low yields -- where you take big losses on every product sold -- could bankrupt other companies. But Microsoft could afford to do so. Microsoft did delay the launch date from October until November. But some inside the company still believed returns would be out of control."

Comments

Re:Dumping? Loss leader?

[kesuki]

I'll explain the difference, Dumping is when a company sells a product below cost to bankrupt their competitors.

Loss leaders are when a store sells a product below what they pay to draw in consumers and get sales.

Clearly the video game industry is rife with corruption and 'Dumping' primarily because hardware makers can subsidize the price of a console with license fees from game developers.

depend on 'dumpers' like Microsoft to have some very complex bookwork, and possibly some Chinese shell corporations to sell high priced parts significantly below cost, but only to Microsoft.

there are lots of ways electronics can be sold below price, specifically cell phones and satellite TV boxes, which come with service agreements. but in the cell phone market, you're not locked into a single phone, although each cell provider has their own line of phones... most big players have models for each provider, except in cases where they get more money to be 'exclusive' to AT&T (like the iphone) etc.

some of this stuff is illegal in many places, but as i said shell corporations are shady and hard to stop. because billionaires often engage in venture capitalism, it's not hard to 'invest' in a shell corporation that's going to go into an exclusive contract to say, sell 40 million $40 dollar parts at $1 a part, and have the initial VC funding of say 40 million dollars, while 'your buddy' makes a cool million cash etc... then let the company go belly up, or keep using the same shell corporation with additional rounds of VC funding...

Proof that MS bought its way into this market

[Frag-A-Muffin]

We've seen it time and time again, how Microsoft can afford to buy it's way into a market segment. I wonder if it will pay off in the long run, because it seems they've hit a saturation point with this product they have. Not much growth over the last product revision, and barely making a penny in the last few quarters (let's not talk about making up for all the loses to date yet).

With the stock price stagnant, how long can upper management convince shareholders that this is the right thing to do?

Re:Right on time ... for the price cut!

[mc moss]

They haven't been resolved. Although the rate of RROD isn't as high as before (it was around 33% before), it still happens to the newer consoles.