Video game consoles have never been very profitable for Microsoft. Now it seems that one console will be costing the company a cool billion dollars.
Microsoft says that it is planning to spend at least one billion dollars to fix general hardware glitches that have plagued the video game system in recent months. The company declines to detail the exact nature or cause of the hardware failures.
In addition to planning on the console repairs, Microsoft will extend the warranty on all of the consoles to three years. The company will pay for all shipping and repairs worldwide. it will also reimburse customers who have already paid for shipping and repairs on consoles before the warranty was extended.
The Xbox 360 has been under attack by critics because of its serious glitches and the bad publicity surrounding them. It still managed, through, to snag the number 2 spot on the popularity list in terms of sales. Currently, the Ninentdo Wii is number one, and the Sony Playstation is at number three.
Microsoft, through Robbie Bach, president of the company’s entertainment and devices division, says that is has already made some manufacturing and production changes that should reduce the number of repairs.
The Xbox 360 glitch causes the consoles to lock up, making them unusable. During hardware failure, three flashing red lights on the front of the unit. Gamers refer to this indicator as the “red ring of death.” The shipping boxes that Microsoft supplies for the consoles are known as “coffins,” and many were worried that the boxes would run out.
Coming up on the horizon is the annual E3 conference, where the video game industry gathers to showcase their goods and gear up for the upcoming holiday season.
The Xbox 360 was launched in November 2005 and sells for between $299 and $479, depending on how the until is configured.
Mary Ann Romans also writes for the Frugal Living Blog here at Families.com, where she shares money saving tips for today’s families.
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