Xbox 360 Repairs Will Cost Microsoft $1B

dianaris

Microsoft to Take $1 Billion Charge for Xbox 360 Warranty ExtensionSEATTLE (AP) --

In another setback forMicrosoft Corp.'s unprofitable entertainment and devices division, thecompany says it is planning to spend at least $1 billion to repairserious problems with its Xbox 360 video game console.

Microsoft declined to detail the problems that have caused anonslaught of "general hardware failures" in recent months but saidThursday it will extend the warranty on the consoles to three years.Theglitches, and the bad publicity, could weigh the company down as itclaws for market share in the highly competitive console market. InMay, the Xbox 360 ranked No. 2 in unit sales behind Nintendo's Wii, butstill beat out Sony's Playstation 3, according to data from NPD Group.
"Wedon't think we've been getting the job done," said Robbie Bach,president of Microsoft's entertainment and devices division, which alsomakes the Zune digital music player, a distant competitor to AppleInc.'s powerhouse iPod. "In the past few months, we have been having tomake Xbox 360 console repairs at a rate too high for our liking."
Bachsaid the company made some manufacturing and production changes that heexpects will reduce Xbox 360 hardware lockups, but he declined toidentify the problems or say which others might remain. Microsoft saidit will record a charge of up to $1.15 billion for its fourth fiscalquarter, which ended June 30, to cover the additional costs associatedwith the warranty extension.

The news comes just days before thevideo game industry descends on Santa Monica, Calif., for its annual E3conference, and it could overshadow Microsoft's plans to build buzz forholiday season video game releases and "Halo 3," a much-anticipatedshoot-'em-up for the Xbox 360 set to launch in September.
Thesoftware maker also said Thursday that sales of the game console fellshort of expectations for the fiscal year that just ended.
MattRosoff, an analyst at the independent research group Directions onMicrosoft, estimates that Microsoft's entertainment and devicesdivision has lost more than $6 billion since 2002.
Microsoft haswritten down larger amounts in the past -- more than $10 billion in thelate 1990s related to investments in telecommunications companies, andmore than $5 billion related to antitrust issues -- but a $1 billionwrite-down for one division in one quarter is significant.
"It suggests the problem is pretty widespread," Rosoff said.

Microsoftwill pay for shipping and repairs for three years, worldwide, forconsoles that experience hardware failure, which is usually indicatedby three flashing red lights on the front of the console, somethinggamers sometimes refer to as "the red ring of death."
This isn'tthe first time Microsoft has made changes to the Xbox 360 repair plan.Last December, the company extended the warranty from 90 days to oneyear for U.S. customers. In Europe, the warranty previously expiredafter two years.
Microsoft also will reimburse the "small number"of Xbox 360 owners who have paid for shipping and repairs onout-of-warranty consoles, Bach said.

In June, bloggers speculatedthat the Xbox 360 return problem was getting so severe that the company was running out of "coffins," or special return-shipping boxesMicrosoft provides to gamers with dead consoles. "We'll make sure wehave plenty of boxes to go back and forth," Bach said in an interview.
ChrisLiddell, Microsoft's chief financial officer, said in a conference call that the company sold 11.6 million Xbox 360 consoles since the product's November 2005 launch, missing a target for 12 million unitsby the end of the fiscal year.
Xbox 360 prices range from $299 to $479, depending on their configuration.
Microsoft'sentertainment and devices division reported an operating loss of $315million on $929 million in sales for the three-month period that endedin March. Microsoft has said it expects the division to post a profitin fiscal 2008.
Microsoft announced the warranty extension aftermarkets closed Thursday. Microsoft shares fell 11 cents to $29.88 inextended trading after falling 3 cents to $29.99 in the regular session.

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sesaper yg dah beli Xbox 360 ni, korang ada problem tak semasa guna game ni..?? of course microsoft tak bgtau apa problem dia... kalo sesaper tau leh citer kat sini.. tak sangka fail jugak selling dia..

[ Last edited by  dianaris at 6-7-2007 12:40 PM ]