Xbox 360 failure rate reaches an alarming 33%

With Microsoft keeping its mouth shut about the actual numbers of the Xbox failure rate, Daily Tech took the matter into their own hands and started their own investigation to get a hint of what the real deal really is.

Daily Tech sent out surveys to retailer stores selling Xbox 360s along with in-store extended warranties. They asked the stores who offered such in-house warranties how many Xbox 360 customers claimed the warranty. The data gathered in the study revealed an alarming estimated percentage: around 33%.

Said former EB games employee Matthieu G., “The real numbers were between 30 to 33 percent,” with a higher estimated rate for launch consoles. He further stated that the store he previously worked for had around 35 Xbox 360s on its launch date, with about half the number returned due to hardware failure during the first six months and two units already “dead on arrival”.

Quotes from Peter Moore, Todd Holmdahl, and EB Games after the jump!

With Microsoft keeping its mouth shut about the actual numbers of the Xbox failure rate, Daily Tech took the matter into their own hands and started their own investigation to get a hint of what the real deal really is.

Daily Tech sent out surveys to retailer stores selling Xbox 360s along with in-store extended warranties. They asked the stores who offered such in-house warranties how many Xbox 360 customers claimed the warranty. The data gathered in the study revealed an alarming estimated percentage: around 33%.

Said former EB games employee Matthieu G., “The real numbers were between 30 to 33 percent,” with a higher estimated rate for launch consoles. He further stated that the store he previously worked for had around 35 Xbox 360s on its launch date, with about half the number returned due to hardware failure during the first six months and two units already “dead on arrival”.

No wonder Microsoft decides to keep mum about the actual failure rate numbers. The software giant claims in official interviews that the failure rate is only set with the industry standards, which is within three to five percent. When cornered, however, they often resort to drawing attention to their effort in fixing the problem. Peter Moore, vice president for Microsoft’s entertainment division had this to say to Mercury News about the issue:

I can’t comment on failure rates, because it’s just not something – it’s a moving target. What this consumer should worry about is the way that we’ve treated him. Y’know, things break, and if we’ve treated him well and fixed his problem, that’s something that we’re focused on right now. I’m not going to comment on individual failure rates because I’m shipping in 36 countries and it’s a complex business.

Todd Holmdahl, who was in charge of the Xbox 360’s design opted to avoid commenting as well. “I would say we don’t have a high defect rate. The vast majority of people are really excited about their product, and that we are targeting profitability for next year,” he said to Mercury News. When pressed if the failure rate indeed fell within the industry stands, he only said “We donÂ’t disclose the actual number…we donÂ’t comment on that.”

However, the actual numbers have prompted one of the major retail store chains, EB Games, to revise its warranty policies both in the US and Canada, due to the high cost of having to honor the warranties of all Xbox 360s being returned for hardware failure.

EB Games nearly doubled the price of the one-year over-the-counter warranty, and instead of giving a brand new console in exchange of the defective one (like in the previous warranty program), disgruntled customers are given refurbished consoles instead. It has to be noted that the change also applies to the PlayStation 3 and Wii, not just to the Xbox 360.

The case is not isolated only to EB Games. Best Buy retailers whom Daily Tech interviewed also revealed a similar trend. A Best Buy customer service department manager, who requested anonymity, said that the console failure rate was estimated at about “between a quarter to a third of all units sold.” He attests:

We see a ton of [Xbox 360s] come back all the time. We strongly push our customers to buy our service plans no matter what they buy, but it is especially important for them with the Xbox 360. ItÂ’s a lucky thing for us that Microsoft extended the factory warranty to one year, because we were having a hell of a time dealing with the launch units. Now we don’t have to deal with those broken [Xbox 360s] until their second year, for those who have purchased the two year plans.

Microsoft, in turn, increased their initial warranty period from 90 days to a full year. Fixing out-of-warranty consoles will prompt the consumer to shell out US$ 140 to get it fixed by Microsoft.

All things considered, it should be taken into account that it is unrealistic to expect any product to have a zero failure rate. What matters most is that Microsoft should make steps toward addressing the issue, and not only keeping consumers in the dark.