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Xbox 360 repairs will cost Microsoft USD 1 Billion

Los Angeles, July 06: Microsoft Corp. said it would take a more than $1 billion charge to fix “an unacceptable number of repairs” to its Xbox 360 video game consoles and had missed shipment targets for the end of June.

Microsoft is under pressure with mounting complaints about Xbox 360 failures on the Internet and growing expectations that Sony Corp. could slash the price of its rival PlayStation 3 console at a video game exposition next week.

So far Microsoft has the lead on Sony in the battle for high-end video game machines, but it shipped only 11.6 million 360s by the end of June, compared with a target of about 12 million, Chief Financial Officer Chris Liddell said during a conference call with analysts on Thursday.

Robbie Bach, president of Microsoft`s entertainment and devices division, said the timing of the announcement about the charge for the quarter ending in June and a new extended warranty were unrelated to any potential move by Sony. “This is just one of those things that happens when it happens,” Bach said in an interview. “We reached our conclusion early this week and because it`s a financially meaningful issue we had to announce it immediately.”

The hardware issue has marred a string of successes for Xbox 360, which has built an early lead over the PlayStation 3 with Microsoft`s strong lineup of games and popular online service. But it is also finding increasing competition for some parts of its business, such as Apple Inc.`s incursion into television shows delivered over the Web, which is also a feature of the Xbox online service.

RED FLASHING LIGHTS

Microsoft said it had investigated the sources of hardware failures indicated by three red flashing lights on the console and had identified “a number of factors” that can cause such failures. Bach said many of those factors took time to show up in the consoles, explaining why the number of repairs had grown in the second year of the Xbox 360`s release. He would not say exactly how many Xbox 360s had been returned due to hardware issues except that “the number is too large.”

The company said it would extend warranty coverage to three years to cover the problem and would reimburse customers who had previously paid for repairs related to the three-flashing-lights error message. It also said it has made improvements to the Xbox 360 console. The charge will be in a range of $1.05 billion to $1.15 billion, before taxes, for the quarter ended June 30, Microsoft said.

Microsoft had already cut its forecast for Xbox 360 shipments in January. It had previously forecast shipments of 13 million to 15 million by the end of June. “What you have to ask yourself as an investor is, should Microsoft be in the hardware business?” said Kim Caughey, senior analyst at Fort Pitt Capital Group, which oversees about $1.2 billion, including Microsoft shares, for clients. She added, however, that the charge should not be a concern for long-term investors.

“It`s a lot of money, let`s not say it isn`t,” Caughey said. “But if you`re a long-term holder, I don`t think it`s going to have that great an impact.” Bach said the new warranty would not impact the Xbox division`s plan to turn a profit in fiscal 2008, which started this month.

He was also mum on the issue of whether Microsoft would announce a price cut for the Xbox 360 console if Sony made a similar move. “We will assess what we do with pricing and other aspects of our business based on our own business,” he said. Microsoft shares dropped slightly to $29.91 after closing at $29.99 on Nasdaq.

Bureau Report

Thank you

http://www.1up.com/do/newsStory?cId=3160709

It’s talking about the fact that Madden ‘08 will be running at 60fps for Xbox 360 and only 30fps on PlayStation 3. For a console that’s supposed to be SO powerful, this is insane, and I’m sick of it. I hate having to have my nose rubbed into the fact that my favorite piece of hardware can’t compete with Xbox 360.

I have been a faithful Sony fan for a long time, and all I ask for is a little appreciation in the form of better dev kits for third parties, and the tools and instructions to allow those developers to better utilize the PlayStation 3. I understand that the PlayStation 3 is newer and a little more difficult to program for, but for a system-selling game like Madden to arrive on PlayStation 3 in terrible shape compared to other versions is nuts.

What makes it worse is the fact that this isn’t an isolated incident. Just about EVERY cross-platform game looks or plays better on the Xbox 360, and that is inexcusable. Something needs to be done, or I will be using my purchasing dollars to buy what Sony’s competitors put out there.

Thank you.

“Dad lets get the RCA TV”

^^^ Correction (also this was way back in about 1993)

Also it will be 15 years in Jan 1. 08

Its good to see people (teenagers) and other adults around my age who actually lost contact with video games feel safe buying a PS3.

Me myself, I always went for Sony. PS1 did great. PS2 did Excellent. PS3 will be extraordinary to say the least.

My father told me once when i asked “Dad lets the the RCA TV, its a big screen and same price as sonys littler screen”, he replied “true son, but its not quality, Sony is quality, Next year that big screen TV will be broke, and the Sony Tv will last 10 years”

He was right and wrong. We ended up getting both (he wanted to prove a point).

The RCA did brake in the next year.

But the SONY didn’t last no 10 years.

It lasted 15 years, and is honestly displaying ESPN perfectly as it did brand new out the box 15 years ago right next to me as i type this.

Sony. Never stray away from Quality. Learn from History. Too many companies get so much money they get greedy, make cheaper stuff, lose quality, lose face, and lose business. You guys haven’t. So please keep up the good work!

“Platforms were born and died within five years maximum.”

- The original Atari system (VCS and hardware revisions) was released in around 1977 and I believe the last game for it was released in the early ’90s.
- The Nintendo Entertainment System was released in 1985 (1983 in Japan) and the system was officially discontinued in 1995.
- The Amiga 500 (technically a home computer but predominantly used for gaming) was released in 1987 and games were produced for it and its hardware revisions until the mid-’90s.
- The original GameBoy was released in 1989. It’s last game, Pokémon Yellow, was released in 1999 but Game Boy Color titles produced after this date were often compatible. Its true successor, Game Boy Advance, was released in 2001.

While I am very glad the original PlayStation was released, bringing with it 3D graphics, CD-quality audio and better mainstream acceptance of video gaming, Sony didn’t end any supposed short hardware life cycle – it instigated it by disrupting the industry.

Not necessarily a bad thing, because increased competition and innovation is benefitting us gamers, but at some point it’s going to have to slow down again. Because as consoles get more complicated and thus more expensive, people will be more reluctant to upgrade so frequently.

For me, the greatest thing U guys have done with the PS3 so far is “region free” game releases. Its great to see U recognising this as a global community.

This means that I can finally play baseball video games here in Australia, even if they are not released here.

Whatever happens with BD movie titles in the future, please make sure PS3 games stay region free.