Gadgets
Steve Ballmer Describes New Xbox 360 Warranty as "Painful"
Marcus Yam (Blog) - July 30, 2007 7:45 AM
Microsoft CEO describes Xbox 360 $1b charge as "painful"
Following reports showing that up to one-third of all Xbox 360 consoles are afflicted with the fatal hardware error termed the “Red Ring of Death,” Microsoft extended its warranty on the machine to cover such a defect for three years.
Although the gaming press has heard many comments from Microsoft’s Entertainment and Devices Division regarding its new policies, little has come out from the giant software company’s top brass.
Speaking to financial analysts last week, Microsoft CEO Steve Ballmer spoke out on the topic on stage, saying, “We have to learn from our mistakes. It was painful to announce the write-off that we had to announce, and yet we knew we had to take care of our customers.”
The write-off that Ballmer is referring to is the over $1 billion charge that Microsoft’s entertainment division is taking to not only repair for free all afflicted consoles, but also to issue refunds to gamers who have paid up to $140 for a fix.
The extended coverage of defective Xbox 360 consoles caused Microsoft’s gaming division to lose $1.89 billion for the quarter – about 47 percent more than the previous period’s $1.28 billion loss from last year.
Although the Xbox 360 “Red Ring of Death” debacle may have shaken consumer confidence in the company’s ability to design and manufacture hardware, Ballmer promised that, going forward, Microsoft will be “world-class when we do hardware.”
