The company said it had set aside US$1.15 billion to fund warranty claims on undetailed user problems with the popular game player.
While Microsoft would not provide details of the hardware issues, it said in a statement that an “unacceptable number” of Xbox 360 machines had been returned by users for repairs, prompting extensive investigations.
The company has extended its warranty program as a result of the investigation.
“Having identified a number of factors which can cause general hardware failures indicated by three red flashing lights on the console, Microsoft has made improvements to the console and is enhancing its Xbox 360 warranty policy for existing and new customers,” the statement said.
“Microsoft stands behind its products and is taking responsibility to repair or replace any Xbox 360 console that experiences the ‘three flashing red lights’ error message within three years from time of purchase free of charge, including shipping costs,” it said.
“Microsoft will take a $1.05 billion to $1.15 billion pre-tax charge to earnings for the quarter ended June 30, 2007 for anticipated costs under its current and enhanced Xbox 360 policies.”
Microsoft’s Entertainment & Devices division president Robbie Bach said for any customer that had already paid for repairs to the Xbox for problems rlated to the three flashing lights error message, Microsoft would retroactively reimburse them.
“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 apologise,” Mr Bach said.
“We value our community tremendously and look at this as an investment in our customer base,” he said.
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