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Report: MS Knew About 360 Defects Before Launch
Investigative report says the 'RROD' defect kept Microsoft from originally planned price cuts.
By Kris Pigna, 09/07/2008
Call us crazy, but we suspect most Xbox 360 owners are by now well familiar with the dreaded Red Ring of Death -- maybe you haven't suffered through it 11 times, but odds are you or someone you know has likely dealt with Microsoft customer support at some point in the last three years. Now, a new report by VentureBeat's Dean Takahashi (author of the behind-the-scenes books Opening the Xbox and The Xbox 360 Uncloaked) contends that Microsoft knew about the issue before the 360's launch, but refused to delay the release in order to beat their competitors to the market. And that decision, the report claims, has kept Microsoft from marketing and pricing the 360 as aggressively as they would have liked to.

The report (which Takahashi calls "unauthorized" but assures is well researched and several years in the making) paints an overall picture of Microsoft rushing through the Xbox 360's initial design and manufacturing, without heeding warning signs that the hardware was suffering from potentially serious defects. "It turned out in the end that this was all going too far, too fast," says one anonymous source about the 360's design process. "They were adding too many features after things were locked down. That incremental feature adding just made it fragile." The report claims (although Microsoft refused to confirm these figures) that as Microsoft went into full production in August of 2005, they had a staggeringly high 68 percent defect rate -- that is, for every 100 Xbox 360s they manufactured, 68 were duds.

But the more interesting point raised in the report is that Microsoft's gamble to continue toward launch (expecting the hardware issues would quickly work themselves out over time) has apparently kept them from pricing the Xbox 360 where they originally wanted it to be at this point in its lifecycle. "The quality problem negated much of the advantage of going first, and it has delayed the company's plan to aggressively market the console and slash its prices," Takahashi writes. "That has stopped the company from reaching the broader market of consumers that Nintendo has won over. It has lowered its ambitions, hoping instead just to get a clear edge on third-placed Sony. The future profits that the company once hoped for are now likely to wind up in Nintendo's pockets."

But Robbie Bach, current president of Microsoft's Entertainment and Devices division, maintains that being first to market was the right decision. "If you take the question of whether it was the right thing to try to be first, the answer to that is definitely yes," Bach says in the report. "It has given us a leg up in a number of places that are super important. It has given us a leg up with game developers. It has given us a leg up from an economics perspective. It helped us expand Xbox Live quickly. At a strategy level, if you asked if we wanted to be first again, I would say yes. It's easy for me to go back and say, if I knew what would transpire over the next two years, would I go back and do something different, I think that's an obvious answer. But the fact is, based on the data we had at the time and all the hard work we put into it, there was no way to see what actually happened."

It's an interesting statement, in that Bach is saying they made the right decision, and yet he also admits they would have done things differently knowing what they know now. And what Microsoft knows now is that whatever intangible gains the defects may have cost them in keeping them from cutting their prices more aggressively, the defects did cost them a very tangible $1.15 billion dollars as a result of extending warranties for the RROD problem in July 2007. "Would I like the billion dollars back? Of course, the answer is yes. But there is still plenty of economics in the business for us to be successful," Bach says.

But with all models of the Xbox 360 just this week receiving a new wave of price cuts (putting the Arcade unit $50 cheaper than the Wii), it's fascinating to consider Microsoft may have actually intended for their hardware to be even cheaper at this point in the lifecycle. Could that have drastically changed the current standing in the so-called console wars? It's impossible to know for sure, but it sure is a fun "what-if" to ponder.


Source: 1UP link

i dont like to visit 1up.com, this is the original link

http://venturebeat.com/2008/09/05/xbox-360...e-console-woes/

i did read it. quite interesting article. BTW, my june 2006 xenon360 is still working, weird eh?

if you watched pirate of the silicon valley, u might know now how microsoft operate.
Copy others, market it better, release it ASAP.
Bug & defect are secondary for them.
Guess who is the biggest 'pirate' of them all?

Anyway, just enjoy the game, despite the flaw in the console design...


This post has been edited by king_kenny: Sep 8 2008, 11:29 AM

i guess the next upcoming xbox console , people would not interested to buy anymore...

You are damn lucky... mine kaput in 3 months, now using Falcon version.

I always say... let others be your guinea pigs first. Then you buy. Hehehe...

LOL.... lets see what game they got first......

Agreed.

Interesting read. Make a nice final chapter to the book.

Here here another xenon august 2006 user

Microsoft wanted to get the market share they need before Sony / Nintendo did. They released Xbox 360 earlier than expected. From 'some sources' that I read, they went hunting for companies that make "affordable" heat sinks and even the solder quality they used was just about acceptable quality. They also missed a lot of vigorous testing before launching the product. Microsoft heard about the so called hardware failure early on but argued it was just how the user chose to operate the console - pirated games, modded, location chosen, etc.. They did not for once think it would end up being caused by their own doings...

So, in some way, Microsoft did what they had to do - to get gamers on the next-generation platform before Sony and Nintendo.

In the end, no one argues that the Xbox 360 games line-up are the best ...

I just wished dearly that Microsoft had put Blu-Ray in the drive... I can't stand game developers complaining about how they have to 'compress' their game onto a single DVD and that the Xbox 360 will have a slightly decreased graphics quality.

I await Fall 2008 update that allows games to be installed onto the Xbox 360...

if can install game meaning x360 gona b like pc la

Yup, just like PS3.

http://venturebeat.com/2008/09/12/microsof...to-venturebeat/

Robert Delaware kena owned

i think the study/article was very interesting. many others can learn from their mistakes. not a big deal ler. MSFT can afford the 1 billion charge and Peter Moore found another high-paying job.

Hopefully they will done right for Jasper.., in the meantime, i'm just going to enjoy games on my 9-month Falcon...

This post has been edited by revived_irfan: Sep 17 2008, 10:25 PM

surprising those xenons are working and everything in between has probably died

falcon hope is there but how long can it last?

everyday is a tick away from the 3rod

Thats why i retire from playing xbox 360 hehe, now im joining PS3 camp

Optical Disc Drive problem on Xbox 360

playing ps3 sure frustrated 1 not many games to play with the exclusives are so limited

For those (in fact every Xbox gamer), this is definitely a MUST-WATCH.

The most shocking part is how Microsoft responded to their findings. So... unbelievable.

PART 1


PART 2