Microsoft To Take $1.15B Charge For Xbox 360 Warranty Extension
Thursday, July 5th 2007, 4:31 pm
By: News On 6
SEATTLE (AP) _ Microsoft Corp. on Thursday extended the warranty on its Xbox 360 to three years after too many of the video game consoles have succumbed to ``general hardware failure.''
The company said it will record a $1.05 billion to $1.15 billion charge for the fourth quarter that ended Saturday to pay for ``anticipated costs.''
Microsoft's entertainment and devices division, which makes the Xbox 360 and the Zune digital music player, reported an operating loss of $315 million on $929 million in sales in the third quarter this year.
``We don't think we've been getting the job done,'' said Robbie Bach, president of the division. ``In the past few months, we have been having to make Xbox 360 console repairs at a rate too high for our liking.''
Bach said the company made some manufacturing and production changes that he expects will reduce Xbox 360 hardware meltdowns, which are indicated by three flashing red lights on the front of the console.
The executive declined to identify the problems Microsoft fixed, or say what problems remain that could prompt general hardware failure. Bach also would not say how many gamers have sent in machines for repair _ just that the percentage is ``bigger than we are comfortable with.''
Microsoft will pay for shipping and repairs for three years, worldwide, for consoles afflicted with what gamers casually call ``the red ring of death.'' Previously, the warranty expired after 1 year for U.S. customers and 2 years for Europeans.
Microsoft also will reimburse the ``small number'' of Xbox 360 owners who have paid for shipping and repairs on out-of-warranty consoles, Bach said.
In June, bloggers speculated that the Xbox 360 return problem was getting so severe that the company was running out of ``coffins,'' special return-shipping boxes Microsoft provides to gamers with dead consoles.
``We'll make sure we have plenty of boxes to go back and forth,'' Bach said in an interview.