Should Microsoft do More?
July 10th, 2007N’gai Croal thinks that Microsoft should either initiate a recall for the XBox 360 or at least be more forthcoming about the failure rate. I am happy that Microsoft has decided to at least extend the warranty for the red ring of death, but as I also indicated in comments here and elsewhere, I’m inclined to agree that at least a voluntary recall would be the ideal solution. Clearly, since this is already supposedly costing Microsoft over a billion dollars, they’re hoping that people will simply be happy with the warranty extension and that the problem will go away $1 billion later.
But N’gai makes some good points (after the break):
- The extent to which we can trust Microsoft that this 3-year warranty will suffice depends on exactly what the failure rate is, which we don’t know. At around 6%, then a warranty extension could make sense, but at 30% or more, we could all be sitting on time bombs.
- The problems with the 360 potentially stem from design issues (which Microsoft won’t specifically admit, but come sort of closest to admitting in an interview within the article), meaning that an unspecified number of 360s, perhaps most/all 360s until just recently, are defective and prone to failure until an unspecified time period, even consoles that are still sitting on shelves.
- Until a significant portion of the defective consoles are repaired or replaced, this issue will continue to hang over both Microsoft and its consumers.
N’gai Croal also makes the point that several high-profile games, including Halo 3, come out this fall, meaning that many gamers will be putting a significant amount of time into the console and will be potentially “left behind” when it breaks. While potentially true, this strikes me a bit of crying Crackdown/Halo 3 Beta “fiasco”. I realize it’s more painful for gamers to lose their console while there are lots of good games to play, but other than the fact that increased play time could lead to more broken consoles, I find the whole “leaving gamers behind” argument a bit hokey.
In any case, given the outcry on the internet, the original 90 day to 1-year warranty extension, and the various hardware changes that have come out over the course of the 360’s lifetime, it’s hard to believe that they only just now have realized the problem. But if we were to take them at their word that they only just now compiled all the numbers and have figured out what the problem is, they’re admitting that all consoles currently sitting on store shelves, that all consoles previously bought, might actually be defective.
It almost makes me hope that my 360 exhibits a red ring of death before my warranty expires, or I will probably be sitting with a dead console for the last few years of the 360’s lifetime. This really shouldn’t be the way people look at ANY product. If we know something is defective and prone to failure, we want it fixed. We shouldn’t have to hope it breaks just so we can get the defect fixed.
Posted in Business, Jeff, Microsoft, Xbox 360 |
July 10th, 2007 at 1:10 pm
I’m confused… the way I read Microsoft’s program, the warranty lasts 3 years *from the date of purchase*, not 3 years from today. So any consoles on store shelves now should be covered for the full three-year time period… and if they haven’t broken in 3 years, it seems fairly safe to assume they’re not going to.
Given that, I also don’t understand the relationship between the failure rate and “time bombs.” Why would the warranty be advisable for a 6% rate but not a 30%? It would impact the magnitude of the problem, but not the applicability of the solution per se - if you know your car has a 50% chance of breaking vs. a 10% chance, the warranty is more important to have because it’s more likely you’ll need to use it. But the *terms* of the warranty wouldn’t need to change.
Would a recall be better? Sure, but it would be incredibly expensive, and I’m not really convinced that it would pass the cost/benefit test.
July 10th, 2007 at 2:24 pm
The difference in failure rate is applicable as to whether an extended warranty is actually a realistic answer to a defective product.
At 6%, you can be 94% certain that the product you have is going to be ok. At 30%, you’re asking every 3rd person to just be happy that, when your console inevitably breaks, at least you won’t have to pay for it. The same goes for the car… Would you buy a car that had a 50% failure rate if it had a 3 year warranty on it? I sure wouldn’t. 6%? That seems far more acceptable since I have a 94% chance of not worrying about it. I’m not sure where the actual psychological barrier is, but my guess is that for most people it’s probably around the 10-20% mark.
I suppose it’s difficult to assess what the cost/benefit test will be exactly, although as N’gai Croal notes, consumers don’t really care about this. If everyone who bought an XBox up through, say, August or September (since there are still potentially “bad” systems on store shelves) is eventually going to have their system fail, that will not only be more expensive than they’re probably thinking, but they’re going to have a lot of angry people on their hands. If after, say, November 2008 a slew of 360’s start breaking, I think we’ll be hearing an earful from early adopters who will just be out of warranty.
If Microsoft doesn’t want to do a recall for something that they’ve basically admitted is defective, then they should probably have extended the RRoD warranty for the lifetime of the console (which we’ll say is perhaps 1 year after 360v2.0 comes out), particularly if they know they’re selling you something defective now.
July 10th, 2007 at 8:34 pm
You both make some good points as usual, but I would add something that is going unmentioned in much of the coverage.
MS played their card, their “ace” by extending the warranty to 3 years (which is no small gesture). But, am I the only one that has noticed that it has done little to quell the critics. I don’t see this getting any easier. They may end up forced to do a recall even after all this. My guess is that their bean counters did the math and the warranty extension was cheaper than a recall, plus I think the warranty extension, had it satisfied the masses, would do less harm to their reputation than a full scale recall. Basically, what this says to me is that “standing behind their product” essentially means taking the safest/cheapest course of action that may handle the solution, rather than going with a full scale honest to goodness solution that actually fixes the problem.
Anyway, the point is that in all the kerfuffle about the 3 year warranty, no one is commenting on the fact that it’s not shutting people up about the problem which must have been MS’ hope.
July 10th, 2007 at 8:49 pm
Good point, used cisco.
Of course, it’s almost ridiculous that Microsoft would think that this would quell people’s complaints. Since they’ve now admitted there’s a problem, they’ve actually opened the door to questions like the ones N’gai presents: When did they know about the problem? How widespread is it? Has it actually been fixed? I sort of like the way he presents it at the end: “The bottom line is that the answer to “Why would you knowingly continue to sell a defective product?” should not be “We’re extending our warranty program.”"
If Microsoft instead had issued a voluntary recall or at least given a “lifetime” (of the console, not consumer) warranty on the RRoD, THEN this may have quelled critics. Sure there would’ve been “I told you so’s” and the usual blather on the internet, but I think this would’ve quickly been overcome with satisfied customers who were able to fix their defective consoles if they either wanted to or needed to.