Microsoft Pays For Red Ring Of Death

Microsoft said Thursday that it will take a charge of $1.05 billion to $1.15 billion for the quarter ending June 30 to cover enhanced warranty coverage on the Xbox.

The Xbox, one of Microsoft’s faster growing businesses, will now have a three-year warranty from time of purchase in addition to other policies. Xbox customers have been annoyed by a bevy of “three flashing red lights” error messages. In various reports, this error was known as the Red Ring of Death.

-- » Microsoft’s Xbox hardware failures prove costly

Ouch. A billion and some change? To put that into perspective, it's nearly the entire loss the games division had for 2006 alone. It's one-fifth of Gamestop's 2006 sales. It is a lot of money.

Course, it is also probably cheaper than the class action suit they'd be facing otherwise. I don't know if this would sway me closer to buying one. I'm not a fan of returning things, even for free.

Update ... interesting take on the potential hardware flaw:

Oh, those transistors again. Has nobody told Microsoft? Transistors don't fail. It's big hardware that fails. We'll have more next week - and in the next few days - but the fact is that the motherboard seems to warp when it gets warm.

-- Guardian Unlimited: Gamesblog