# Xbox 360 Failure Rate? Do the Math

Now that Microsoft has done the right thing about the Xbox 360’s rampant hardware problems, one key question remains:

What is the failure rate for the system? MS won’t say. The Seattle Times quotes MS games boss Robbie Bach (left):

Suffice it to say that with a billion-dollar charge and the focus we’re putting on this that it’s a meaningful number.

While normal console failures are apparently in the sub-5% range, some reports have estimated that 360’s throw the red rings at a rate as high as 33%.

Here are the numbers that are known. The Times (and other sites) are reporting that MS has shipped 11.6 million Xbox 360’s to date, but the failure rate remains a mystery. The addition of a three-year warranty for the rings of death failure is expected to cost MS a cool billion dollars, so:

(11,600,000 * X) * Y = 1,000,0000,000

…where 11.6m is the number of systems shipped; X is the failure rate and Y is the total cost to MS per replaced unit. This works out to:

Y=86/X

Now, math is not especially GP’s strong suit, but if each repair (Y) costs MS \$100, that translates to a staggering failure rate of 86%.

At \$200, the failure rate is 43%. At \$300 it’s 29%. At \$400, it’s 22%

At the high end, the \$400 repair cost on a 22% failure rate is very unlikely. Since that is the current system’s MSRP, why bother to repair?  They could just send you a new 360 to replace your dead one.

On the other end, the 86% scenario seems pretty extreme (perhaps not if you’re one of the unfortunates who have lost multiple 360’s to the dreaded rings).

There is a lot of behind-the-scenes stuff we can’t know here. But, based on the numbers, a failure rate between 29% and 43% would not be unreasonable. So maybe those 33% reports aren’t so far off the mark, after all.

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1. 0
travestibu says:

Don’t forget that the ESA represent the member companies and their policies, so if these are sticking point issues with you, travesti blame and fight the companies themselves. travesti i am.

2. 0
oto kirlama says:

Gallagher can araç kiralama say all he wants, but I strongly rent a car believe it’s due to his crappy leadership and E3 being a joke. ESA’s Board of Directors need to find a way to get out rent a car of this horrid contract with this Bush cronie before there’s no one left on the Board.

Btw, I think Atari and Midway will drop out too, but mostly travesti because  these guys have done nothing ttnet vitamin or little and need to start saving costs.

3. 0
markofando says:

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Check out the video they have on the page.

Cheers

Marko Fando

4. 0
TIM says:

CONTACT SEC.GOV CONTACT INVESTORS PAGES RELEASE THE TRUTH! I NOW AWAIT MY FOURT RETURN TO GO BACK TO MC ALLEEN TEXAS WITH IS NOT MICROSOFT BUT A COMPANY CALLED JABIL JABIL.COM THEY RECENTLY PURCHASED A COMPANY IN INDIA? YOU KNOW THE PEOPLE YOU TALK TO WHEN YOU HAVE A PROBLEM!! IF ONE XBOX360 FAILS THEY ALL WILL? MICROSOFT CANT WAIT UNTILL YOUR THREE YEARS IS UP CAN YOU?

5. 0
Unsasysam says:

I’ve got an Amazon gift certificate burning holes in my pocket,
and I want to get the most bang for my buck.

Enter the Secret Amazon Web Pages:

This is where you’re going to find the “latest sales, rebates, and limited-time offers” from
Amazon, and you can score some pretty deep discounts if you’re a savvy shopper.

Next, there’s the special Sale link. This is open every Friday, and ONLY on Fridays.

You can find the same good discounts here as you would in hidden Deals, although some
Fridays you can really get lucky and make off like an Amazon bandit – I’ve seen discounts
there as low as 75% off sticker price.

6. 0
Axewielderx says:

I just recieved my 3rd xbox 360 less than3 weeks ago. It froze after being on for 15 mins.,while still being in the dashboard. I would love to see someone elxplain that.
Microsoft has no idea what the problem is and the warrenty is bogus. You are not honoring your warrenty if you keep sending defective products to your customers. I believe this is called Fraud.

7. 0

[…] James Robertson has brought up a topic of consoles again. While I totally agree that reported failure rates are absolutely unacceptable and point to a problem in either hardware design or shoddy assembly, the other important side of the story that often gets overlooked is how Microsoft deals with these failures when they do occur. To be honest, I was a little concerned about the perceived failures when I bought my own Xbox 360 for Christmas, and those concerns grew into uneasy anticipation when I started seeing intermittent error messages during bootup before network adapter died completely. I pretty much expected the repair process to cost me a couple hundred dollars and countless hours spent on the phone, but actually that couldn’t be further from the truth. Here’s how the process worked (in my case, other’s may differ, but the chatter in blogosphere indicates similar experiences), […]

8. 0
A.C.E. says:

@Brokenscope:

dont forget that SONY also probably follow a ROHS in Japan due to manufacturers being responsible for recycling of their products. if PS3 had the same issues it would be indicated at least on the Japan market by now whether Europe PS3s are RHOS or not. (its not really mandatory yet after all)

9. 0
Brokenscope ( User Karma: 0 ) says:

I’m beginning to wonder if this has something to do with ROHS directives in Europe?

The electronics industry is having a whole hell of trouble with it. For the type of soldered ball grid arrays they use…. without lead well, companies are making boards and the chips are falling off and they don’t know why sometimes.

My company currently has an xray machine set up in productions so we can see what where the failures are occurring, currently it isn’t pretty, we can’t find what is causing half the failures.

Alas,in computing it seems lead is just as important as silicon.

10. 0
Eli Mordino says:

Don’t forget that they’re reimbursing everyone who has paid for a repair over the past nearly-two years. That must account for a fair chunk of the billion dollars.

11. 0
G-Dog says:

That only took two years. Good thing I decided not to buy one, based on the fail rate, after X-Mas of 05. All I heard in my office for a week was how many of the damn things stopped working the first day out of the box.

Springs and paper mache people. The 360 is made from springs and paper mache.

12. 0
Marlowe says:

There may be a better chance for Xbox’s that previously broke to break again, that could explain the anecdotes of Jimmy who sent the thing back to Microsoft for the 12th time

13. 0
Dog_Welder ( User Karma: 0 ) says:

And it’s weird because I still haven’t had any issues with mine, which I purchased at launch. A friend of mine has sent his back twice now. He’ll be thrilled that he’s getting reimbursed for any costs for repairs.

14. 0
Robb ( User Karma: 0 ) says:

The suspicious side of me thinks that some of the sales-losses for each system may be rolled up in the retroactive costs to provide a bigger tax write-off. But I’m very cynical that way.

15. 0
ijed ( User Karma: 0 ) says:

Hm.

Well, Microsoft as done something practically unprecedented by saying they’ll repair broken ones for free (that’d be, treating the consumer with respect after they’ve given them money). Although they’re still looking at games revenue . . .

Which means the problem must be serious. It’s pretty loaded to think so, but that’s the logical conclusion.

I work in games and we’ve had five devkits die out of around fifteen. Another five need to be squeezed (as in pushing downwards when stood on end) every couple of hours to continue working.

It sounds like MS is going to lose a pile of money on this, but its f*ing excellent to see that they’ve approached the problem so well.

16. 0
laterose says:

When I sent my xbox in for the three red lights of doom, they did just send me a new one rather then repair it. I sent it in right after they changed the warrenty to a full one year, so it’s possible that they were a little swamped at the time. But my guess would be that the repairs are close to what it costs them to make a console.

17. 0
Ed Gardner ( User Karma: 0 ) says:

“At the high end, the \$400 repair cost on a 22% failure rate is very unlikely. Since that is the current system’s MSRP, why bother to repair? They could just send you a new 360 to replace your dead one.”

That’s what they did for me, so, maybe that’s not so far fetched. I might also factor in marketing communications around it, and legal fees, alot of things could go into that billion bucks.

I am not going to argue with an extended warranty for free though

18. 0
Dave ( User Karma: 0 ) says:

Seems my 360 has fallen into the “failure” category, as well.

This is just baffling. The original XBox didn’t have problems like this, so it’s not as if Microsoft is inexperienced.

19. 0

This reminds me of something. I feel like I’m getting de’ja vu. Oh, yeah. It was the original X-Box. Constant hardware failures, people not even wanting to touch them for months on end (I can remember the PX I went to in Germany just trying to get rid of their inventory on them), etc. Microsoft has made this kind of mistake before. I’m unimpressed with their ability to learn from their mistakes.

20. 0
~the1jeffy says:

You know, I still don’t think M\$ ‘did the right thing.’ This is a standard recall math situation: if X * Y * Sold Units > The Amount It Would Take To Keep It Quiet, you issue a recall (or in this case, warranty extension and retroactive reimbursement). It’s positive move, to be sure, but the RIGHT thing would have been to release the console when it was ready, and have your second console be as robust as the first.

And I find it odd that a week after GP complains, M\$ issues this move. Does GP have such awesome clout, or did GP get wind of this move early? Maybe my skepticism is a little too healthy …

21. 0
Brok3nHalo says:

Good article, just wanted to mention a correction to your math that might account for the vast difference in percentage assuming the \$100 per repair:
“MS has shipped 11.6 million Xbox 360’s to date”
They are obviously going to ship much more units over the next 3 years, and assuming it’s cheaper to repair the problem than actually fix, and that the rate of shipments per year is constant that number quickly moves from 11.6 to 29 million consoles, with this adjustment it comes out to roughly 34% of all 360s ships, also this doesn’t take into account that numbers of consoles produced would go up over time and shipping and handling costs (I think I read they’re handling that as well) among other factors. Those other factors may be negligible though, as the cost of the repair parts theoretically would go down causing the repair to be cheaper.

22. 0
Jabrwock ( User Karma: 0 ) says:

The math probably gets more complicated if you try to figure out how many users suffer multiple failures. I suspect that happens more often than not, because it happens in other industries too. Something goes, they patch it. But it wasn’t responsible for the overall bad state, so something else goes. Then another. They keep replacing the parts that are obviously broken, but not the underlying cause, so the system keeps failing.

Happened to my car. They took it back 3 times, because first they thought the battery, then the alternator, then then finally they traced it to a short in the circuitry.

23. 0
point09micron says:

Xbox 360 failure rate is 100%!

Anything with moving parts is going to break eventually.

24. 0
qAaRoN ( User Karma: 0 ) says:

“On the other end, the 86% scenario seems pretty extreme (perhaps not if you’re one of the unfortunates who have lost multiple 360’s to the dreaded rings).”

On my 3rd one and my 1yr warranty hasn’t even expired yet.

25. 0
Salen says:

Well, I had a problem with my first 360 with it locking up at random times. Not a Red Ring of Death but it was locking up. Instead of just fixing my original 360, they just mailed me a whole brand new system instead. My new system runs nicely now, and I’ve only had it give me issues 1 or 2 times at most over half a year now.

I’m going to guess that the cost per system is the fact that they’re having to replace all those dead systems completely, bringing the overall number of systems down. Another place that 1 billion might be going is to revamp the manufacturing process as well to make sure there are lot less issues later on, or a reserve of cash to pay for future replacements.

Either way, I love my 360, and I’m happy Microsoft decided to throw down the 3 year warranty extension.

26. 0
Slothy says:

There’s a problem with your math. They’re taking a one-time \$1.3b charge for extending the warranty to 3 years. So, the total cost is going to include consoles that die over the next 1.5 years as well – so the real failure rate is going to be tied up in their future sales projections and failure projections, which we don’t know.

27. 0
Brokenscope ( User Karma: 0 ) says:

I am a 360 fan, I will not own a sony product for the time until they change certain practices. I have no dislike of sony as a game company, I think the cell is an amazing piece of silicon and I would kill for the chance to program one of these things. I have been giddy about them since i first read about them from IBM.

The following is completely off the wall and hypothetical. Everything I say is based on limited information and minimal research. I am attempting to not give a point of view and maintain some neutrality. This is not a condemnation of any system. It is simply the musings of a concerned consumer and as someone with a significant interest in the continuing competition between the big 3 console makers. I am also concerned because I hope to graduate from college and make games. These are my theories and my genuine concerns.

[RAMBLING THOUGHTS AND CRAZY THEORIES]

Guys, this is not a part breaking. Looking back at the issue, Im wondering.

RoHS compliance means removing certain hazardous materials. Lead Cadmium and the like. Lead is a great material for securing a chip to a board. It doesn’t oxidize, it has a very low melting point and it is soft enough to deal with flexing and expansion due to heat. Europe stated RoHS would go into effect on July 22 2006. http://en.wikipedia.org/wiki/RoHS

In Europe RoHS has for the most part banned lead from being used in consumer electronics. This means computers, cells phones, and the like.

To replace lead they use silver. One issue, silver is brittle, very brittle. Really any stress (Expansion, vibration, anything) can pop a chip soldered to a board with silver. Its not that hard, silver just doesn’t work as well as lead. Oh yeah, silver also costs more.

I have heard many a time someone say “I have a box from launch and it is still chugging away.” Well I say the same thing, I got mine in early January 06, its still running. In fact all the people I know who got one within 5 month of launch none of them have had a 3 rings error. 2 Were sent back for repairs because ti stopped reading disc. Just a quick look at the games club at my college, this gives a 5% failure rate. I would like a better sample but this only occurred to me today while at work talking to the guys in production and my mom who works up in test engineering.

Many electronics manufactures rushed out a ton of stuff to beat the dead line. They wanted enough products in stock that they could sell under an exemption so they would have time to switch over to RoHS compliant manufacturing.

Looking at this I have realized something. When did we first really see the 360 supply shortage stop? Summer 06 if memory serves, when did the red ring of death stuff start happening in droves? Well if memory serves, fall 06. Just in time for RoHS compliant boxes to be rolled out and used for a time, enough time for them to start breaking.

The worst part is? The only solution is to find a replacement for silver that works like lead but isn’t banned. No amount of super cooling is going to solve the problem. Eventually the solder points are going to crack and break then the chip will fall off.

Now looking at the bigger picture I realized something. Big N could be avoiding the issue completely. They have a small quiet console that doesn’t generate a ton of heat, and thus by the time it breaks it won’t matter because the console will be rather old.

What about the PS3? Toshiba, Sony, and IBM, they in theory, could have the capacity to Produce RoHS compliant systems for Europe and non RoHS ones for the other major markets. What could this mean? Well PS3s could start failing droves in Europe too. However it RoHS like standards are being put together all over the world. The US is going to have a similar one soon. So this could be a problem for both MS and Sony. Who knows.

If I’m right, well console gamers get screwed. If I’m wrong well the world turns and the console war goes on.

[/RAMBLING THOUGHTS AND CRAZY THEORIES]

28. 0
Shan says:

My first-generation 360 is still running strong for a year and a half now while constantly remaining on.

I was also able to get my original XBox repaired for free two years after the warranty expired and had it back within two weeks. I guess it depends on the guy you get on the phone.

29. 0
Andrew says:

Think about this, also: there’s a cost involved in shipping to and from the repair center, there’s the general cost of repairs, which we can assume must be decently expensive considering the complexity of the procedure. They also have to pay for the hiring, training, and paychecks for all the additional workers they’ve hired to deal with things

(“I think we’ve got the infrastructure we got in place, but this is a very large policy change, and it’s going to require agent training and stuff of that nature…”)

30. 0

@Brokenscope
Wow. Very good point you made, I got my 360 back in about March 06 and it still works perfectly fine (other than some disc-reading problems). I think the reason you said might just be the root of the problem

31. 0
Akbar says:

There’s a problem with your math, I think. Now, I’m no accountant (and thank God for that), but I remember when Western Digital and IBM and the other big boys all reduced their warranties from either 5 to 3 or 3 to 1 years, their biggest claim was that it freed up a lot of money that they had to keep on the books. Looking at Wikipedia (not the greatest source, I know, but it’s all I found on such short notice), I found this:

“A manufacturer or distributor may be required to carry reserve funds on its financial balance sheet to cover potential services or refunds that may arise for any products still covered “under warranty”.” (http://en.wikipedia.org/wiki/Warranty#Extended_warranty)

So it’s possible that it’s not the amount of failures that Microsoft expects to have to pay, but perhaps they have to reserve a certain amount of money for absolutely every unit sold, just in case each one comes back. {That} can add up to a billion, pretty easily.

–Ak

32. 0
Jessica Mintz says:

Anyone want to chat about an Xbox 360 meltdown? I’m a reporter with the Associated Press, looking for some real-world red rings of death. jmintz@ap.org

33. 0
Pirra says:

[random bit] Doesn’t the formula for system failure remind you a bit of the one form the beginning of Fight Club where Edd Norton’s character is talking about how car companies decide weather to recall a car model or just go through some lawsuits? I was just wondering.[random bit]

Anyway… while the situation sucks I think M\$ has acted wisely by giving free repairs and extending warrantys.

34. 0
Randomd says:

The calculation above looks like a pretty good approximation to me. I think it takes into account all the factors that really matter.

As for the refunds of previous repairs, the calculations above Do address that issue. After all, each of those previous repairs were a portion of the of the 11.6 million units sold to date.

As for future systems. The Microsoft statement plainly states that Microsoft is changing the design to address the problems. Consider that it takes awhile for newly built machines to make it from the factory to the retail channel (at least a month if traveling by boat). I strongly suspect that Microsoft is currently building systems with a new design. I think they’re hoping and preying that the new systems won’t have nearly the return rate as the current design.

While the calculation above doesn’t take into account multiple failures of a specific unit, I don’t think that factor would impact the numbers very much. After all, many of the people to have suffered multiple malfunctions have received new units. It’s certainly possible that Microsoft doesn’t even try to repair badly over-heated units.

Overall, the calculations look shocking accurate. It was certainly the right thing for Microsoft to do. On the other hand, a class action suit was probably just about to happen. And while Microsoft can certainly afford this billion dollar charge, it is the admission of a massive failure by the company. It also makes clear that Microsoft has been boldly telling outright lies about 360 failure rates for some time.

35. 0
Brokenscope ( User Karma: 0 ) says:

RoHS Is causing trouble for anyone who makes integrated electronics and computer parts.

36. 0
Ace of Sevens ( User Karma: 0 ) says:

I suspect the \$1 billion includes the cost to redesign the system to prevent new units from having the same problem in the future.

37. 0
Randomd says:

You’re right, the charge probably does take redesign costs into account. But unless it’s a complete redesign, I wouldn’t imagine the redesign costs would suck up any more than a few percentage points of the 1.15 Billion dollar charge.

There are strong rumors in the industry that MS is about to drop the price on the standard unit by \$50. It wouldn’t surprise me if the new design were to coincide with this price drop.

(It also wouldn’t surprise me if MS were to discontinue the core unit at the same time. A \$50 difference in unit prices wouldn’t make much sense, and I haven’t heard any rumors about a price drop for the core price.)

38. 0
Salen says:

Uh… yeah. Nothing like free enterprise in the middle of a discussion on the 360 and Warranties. Something tells me having someone else fix the 360 will void said warranty.

39. 0
Randomd says:

Microsoft just held a conference call regarding the red-ring warranty problem. Here are the bits pertaining to the calculations above.

They refused to discussed defect rates other than to say it is a “meaningful” amount.

They mention that the Billion is to be split 50:50 between the existing 1 year warranty and the 3 year warranty. They say some of the existing warranty portion may be used to fix (re-manufacture?) currently warehoused units and that some of the money will be used to write off units which cannot be repaired cost effectively. Unless they have truly huge amounts of warehoused, defective 360s, this wouldn’t seem to have a large effect on the calculations above.

The Billion dollar charge does not seem to include any redesign fees. (there was no mention of this)

The Billion dollar charge does Not include warranty repairs made prior to today.

“We’ve been incurring some costs during the course of the year, both for the repairs that we’ve done to date and that; and this is over and above that (billion dollar charge).”

So remove those repairs from the stats above.

The Billion dollar charge does NOT include costs to fix newly made machines. Microsoft thinks the newly (redesigned?) Xboxes will not have the issue.

“And to be clear, clearly, with the Xboxes that we’re now manufacturing, even though the warranty is for 3 years, that’s as much a security blanket, if you like, rather than an expectation. We expect it to be a very good performance going forward, given the corrections we’ve made in the manufacturing process.”

Bottom Line:
Assuming that most of the billion will be spent on warranty repair, it would seem that Microsoft expects a truly Massive proportion of the Xbox 360s manufactured to date to fail within a 3 year time period!

http://www.joystiq.com/2007/07/06/microsofts-red-ring-warranty-conference-call-transcribed/

40. 0
logic says:

The 3 year warrenty does not just go for currently shipped consoles but also future consoles so the real equation is

s= total number of 360 that will be bought ever
f= failure rate
c= cost to fix defective units

(s*f)*c= 1×10^9

So the cost really depends on how many they sell.

But if they fix the problem then the [posted] math might be right

41. 0
Terminator44 says:

@Brokenscope

Yes, that theory may be one the right track, though I think more evidence is needed before we can start taking it too seriously. To add to the anecdote, many of my closest Live friends got their 360s at launch, and few have had to send it in (or won’t admit it) for El Circulo Rojo de la Muerte.

I for one would love to see the research RoHS presented in favor of banning lead from consumer electronics. If that is the cause of hardware unrealiability all around, they better have a good reason for it.

42. 0
Randalor ( User Karma: 0 ) says:

I’m on my third system now. The first one lasted… about half a year to a year before crapping out on me *Yay for Dead Rising killing the CPUs!*, sent that in, got a brand new system *the policy they had for Canadians at the time*, that one lasted… 3 months maybe? before crapping out, sent that one in, got a refurbished system that’s been going strong for well over a year now *Other than the disc drive making an odd sound whenever there’s a disk in it, it’s fine*. So yeah, that whole thing about the RoHS policy sounds reasonable to me.

43. 0
Terrible Tom ( User Karma: -1 ) says:

I guess it IS a moving number… it’s constantly going up.

44. 0

It’s plain and simple why the 360 has such a high failure rate: poor manufacturing. They skimp on materials to try and save every dollar, but as they just found out, it cost them a nice billion and some. I don’t blame ROHS, hell they’re helping the planet. PSP is built on all ROHS compliant solder, and have you seen the NAND flash pop because of it? No. It’s all because Microsoft saves a dollar a system, just to lose a dollar and change per system for that penny pinching.

45. 0
ZippyDSMlee ( User Karma: -1 ) says:

thats probably it,but the RoHS and removing lead from solder is a intersing angle to it.

I think the manufacturing spec is to high for china factories to do without a high fail rate,this is what they get for trusting china shops LOL

46. 0

[…] Xbox 360 failure rates July 8, 2007 Posted by Boris Popov in Life, Games. trackback James Robertson has brought up a topic of consoles again. While I totally agree that reportedfailure rates are absolutely unacceptable and point to a problem in either hardware design or shoddy assembly, the other important side of the story that often gets overlooked is how Microsoft deals with these failures when they do occur. To be honest, I was a little concerned about the perceived failures when I bought my own Xbox 360 for Christmas, and those concerns grew into uneasy anticipation when I started seeing intermittent error messages during bootup before network adapter died completely. I pretty much expected the repair process to cost me a couple hundred dollars and countless hours spent on the phone, but actually that couldn’t be further from the truth. Here’s how the process worked (in my case, other’s may differ, but the chatter in blogosphere indicates similar experiences), […]

47. 0
StiC says:

According to MS the failure rates went from industry norm (3 to 5% I think) to significant (currently estimated as high as 33%) over the course of a few months. What will the next few months have in store for X360 owners? 40%? 50%? And what about Forza bricking systems? MS says there is no software problem so perhaps it’s all the gaming marathons with this popular title. If so what impact will a title such as Halo 3 have on the failure rates?

48. 0
LotsofLuck says:

“(11,600,000 * X) * Y = 1,000,0000,000”

There’s one extra zero in there, right now it’s says \$11,600,000(X)(Y)=\$10 billion.

Anyways, that’s freaking crazy! 1 billion for repairs? I’m hoping that Y is small, because that means people will get their 360’s back quicker, but that means the failure rate is pretty high