July 5, 2007 - Microsoft announced today that it is expanding its Xbox 360 warranty to three years for any customer who experiences the three flashing red lights error message that indicates hardware failure. All repairs will be made free of charge for three years from the time of purchase, including shipping expenses. Anybody who previously has paid for their consoles to be repaired related to three red light error message will be retroactively reimbursed. Other existing Xbox 360 warranties remain unchanged.
The warranty covers all Xbox 360 consoles. Whether you purchased an Elite, Core or regular Xbox 360 with a hard drive, the new expanded three year warranty holds from the date of purchase. Launch Xbox 360 consoles will now be under warranty from hardware failure until November 2008.
With reports of massive numbers of hardware failures, one can easily anticipate that this retroactive warranty update will not be cheap. In fact, Microsoft is going to take a $1.05 to $1.15 billion pre-tax charge to earnings for the quarter that ended on June 30, 2007, for anticipated costs that it will incur under the current and new enhanced warranty policies.
"We decided to do something pretty drastic to take care of our customers. Doing what we believe is the right thing for our customers is important to us," Microsoft Corporate Vice President Peter Moore told IGN. "If you've had expenditure to fix your Xbox 360, we're going to reimburse you."
For those unsure about purchasing a 360 for fear of the dreaded Three Red Lights of Death, Moore says there is no reason for concern. "We have a great deal of confidence that a lot of the problems we've been seeing are behind us," Moore said. "Consumers should feel no issues about walking into a store and buying a 360 today. And should anything go wrong, we'll take care of them immediately."
Moore could not comment on the return rate of Xbox 360 consoles, which has been recently rumored to be close to 30%. He also seemed unconcerned with any negative reactions to 360 on the eve of E3. "If it's negative connotations heading into E3, so be it the overriding focus is it's good for consumers and we're taking care of people."
"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 apologize," said Robbie Bach, president of Microsoft's Entertainment & Devices Division. "We value our community tremendously and look at this as an investment in our customer base. We look forward to great things to come."
The company is making the move as a result of what the company views as "an unacceptable number of repairs to Xbox 360 consoles." Microsoft claims that it has identified a number of factors that cause the three flashing red lights error message and has made improvements to the console.
Whether the improvements result in less hardware failures remains to be seen. In the meantime, those with broken Xbox 360s can begin cheering.
Now i've gotta say, from the 3 month warranty it first came with to 3 years, thats pretty good. But maybe this is to cover up a investigation about that 30%, that might of cost them alot more lol.