The Xbox 360 video game console was subject to a number of technical problems and failures, some as a result of design flaws. Some issues could be identified by a pattern of red lights on the front face of the console; these colloquially became known as the "Red Ring of Death" or the "RRoD". There were also other issues, such as discs becoming scratched in the drive and "bricking" of consoles due to dashboard updates. There were many conflicting estimates of the console's unusually high failure rate. The warranty provider SquareTrade estimated it at 23.7% in 2009, while a Game Informer survey reported 54.2%. Among the consoles owned by employees of Joystiq, which saw heavy use for games journalism purposes, the failure rate had reached 90% by the end of 2007. The crisis was ultimately abated from 2009 by design revisions to the later-produced Xbox models; the S model in particular was far more resilient. By 2012 the failure rate for the Xbox 360 family was comparable to the PS3 failure rate. The issues proved extremely damaging for Microsoft. Repairs and shipping of replacement hardware cost the company US$1.15 billion. The issues triggered multiple lawsuits, cost the Xbox ground in the console wars and threatened the long term viability of the Xbox brand.
History The design of the Xbox 360 was a hurried process subject to a number of late changes. This included the addition of a hard disk drive, which compromised airflow in the machine. The holes in the case were added to try to ameliorate this airflow issue. Time pressures also resulted in insufficient testing. Microsoft was aware of myriad technical challenges as early as August 2005, including "overheating graphics chips, cracking heat sinks, cosmetic issues with the hard disk and the front of the box, underperforming graphics memory chips from Infineon, a problem with the DVD drive – and more". Manufacturing issues with the GPU were ultimately what caused the infamous "Red Ring" issues, while the DVD drive issue was later responsible for scratching discs. An engineer requested a shut down of the production line that month, but this did not occur out of fear of a delay to console delivery in some regions. The console launched in November 2005 in North America, swiftly followed by other regions. However, consoles began failing "almost immediately". Microsoft initially dismissed these concerns as "isolated reports", that were within the normal range of failure (around 2%). In late 2005, Microsoft's internal data was reporting a failure rate during manufacturing of around 6–7%. These consoles were not shipped to consumers but remained in warehouses. By March 2006, around 30% of consoles manufactured were either returned or had failed checks at the factory. At one point Microsoft's yield was as low as 32% (meaning a failure rate of 68%).
Peter Moore, the Vice President of Microsoft's Interactive Entertainment Business division in 2015 detailed a conversation he had with Microsoft CEO Steve Ballmer on his planned response to the incident in the mid 2000s. He stated: "...here's what we have to do: we need to FedEx an empty box to a customer who had a problem - they would call us up - with a FedEx return label to send your box, and then we would FedEx it back to them and fix it. ... I always remember $240m of that was FedEx. ... It was sickening. I was doing a lot of interviews. ... We couldn't figure it out. ... There was a theory. We had changed our solder, which is the way you put the GPU and the fans, to lead-free. ... We think it was somehow the heat coming off the GPU was drying out some of the solder, and it wasn't the normal stuff we'd used, because we had to meet European Standards and take the lead out. ... He said, 'what's it going to cost?' I remember taking a deep breath, looking at Robbie, and saying, 'we think it's $1.15bn, Steve.' He said, 'do it.' There was no hesitation. ... If we hadn't made that decision there and then, and tried to fudge over this problem, then the Xbox brand and Xbox One wouldn't exist today." While Peter Moore theorized that cracking lead-free solder was the issue, the same solder was applied to attach the CPU, and the CPU did not have any issues. This was an early theory which was later proven incorrect. In July 2007 Moore published an open letter recognizing the console's problems, as well as announcing a three-year warranty from the original date of purchase for every Xbox 360 console that experienced the "general hardware failure" (Red Ring) issue. That October a class action lawsuit was brought against Microsoft due to the problems the console had with disc scratching, which could render games unplayable. The case was lengthy and worked through the court system over the following decade, with litigation focusing on the validity of class certification. In 2017 the matter was decided by the United States Supreme Court in Microsoft Corp. v. Baker, which settled in favor of Microsoft.
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