Xbox repairs to cost Microsoft US$1bn

Microsoft has said it will take a more than US$1 billion pre-tax charge after suffering quality problems with its Xbox 360 console.

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By  Michele Howe Published  July 7, 2007

Microsoft has said it will take a more than US$1 billion pre-tax charge after suffering quality problems with its Xbox 360 console.

The software giant announced it expects to record a US$1.05 billion - US$1.15 billion pre-tax charge in its next financial results for anticipated costs under its warranty policies following an "unacceptable number of repairs" to the console.

It also said it had extended the warranty coverage of the console to three years.

An extensive investigation had identified a number of factors that could result in hardware failure of the console, the company said.

It did not give further detail on the causes or the extent of the problem.

"The majority of Xbox 360 owners are having a great experience with their console and have from day one. But this problem has caused frustration for some of our customers and for that we sincerely apologise," Robbie Bach, president of Microsoft's Entertainment and Devices division stated.

The firm said it would repair or replace any Xbox 360 console experiencing hardware failure, indicated by three flashing red lights, within three years of purchase, and that it would reimburse customers who had paid for their own repairs.

The admission of quality issues is the latest setback Microsoft has had with the Xbox 360 console, which it launched in November 2005 and which arrived in the Middle East earlier this year.

It also missed its sales target for the console, selling 11.6 million units since its release against its target of 12 million.

4394 days ago
Naz Hussain

Prior to moving out to Dubai from the UK, I had purchased an Xbox 360 for my son which has now unfortunately fall victim to the "3 red light" disease. Upon calling the customer "service" centre, I have been told that as I am no longer in the UK where the console was purchased, I am out of warranty area and therefore am not covered by Microsoft's pledge to fix the bug at its own cost and would have to pay to ship the console out to the UK to have it repaired.  
 
For a company the size and scope of Microsoft to give this as an answer to someone who has emigrated is both pathetic and an appauling misjudgment of service, considering the fact that they have fierce competition hot on their heels, you would think they would be bending over backwards. 
 
Seems like the only thing Microsoft are interesting in bending is my credit card. 
 
I know which console i'll be buying my son next thanks to some "great" customer service that would even put the region's banking industry to shame.

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