Robbie Bach, president of Microsoft's entertainment and devices division, declined in an interview to say what specifically caused the failures or how high the failure rate has been, but Asian manufacturers of the Xbox 360 who have been pressured by Microsoft to lower costs by as much as 15% say that the problem is caused by poor Microsoft design and the Company buying low cost components in an effort to beat Sony.

Recently Microsoft adopted various strategies to be more cost competitive with its Xbox 360 game consoles, with moves including asking for a price reduction from Taiwan-based component makers and working with Lite-On IT for its add-on HD-DVD drive, according to sources in Taiwan.

One Asian manufacturer that SmartHouse spoke to on Friday said "Microsoft have known of this problem for a long time. They are trying to blame component manufacturers but it was a combination of bad design and them (Microsoft) wanting everything cheap. This is what caused the problem along with them wanting to beat Sony to market. A lot of manufacturers were pushed to deliver components without much testing of the components working together inside the console".