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Xbox 360 defects: an inside history of Microsoft’s video game console woes

VentureBeat's Dean Takahashi (author of The Xbox 360 Uncloaked: The Real Story Behind Microsoft’s Next-Generation Video Game Console) tells the behind-the-scenes story of a now-familiar tale of woe:

This is the unauthorized tale of how Microsoft lost its chance to become the leader in the biggest market it has attacked beyond its twin monopolies in Office and Windows software. Rival game console maker Nintendo out-thought the larger players Microsoft and Sony by designing the Wii game console with a clever, intuitive game controller. Even so, Microsoft could have captured more gamers during this product generation, yet the Red Ring Of Death (RROD) problem held it back. The Xbox 360’s defect problem will go down as one of the worst snafus in consumer electronics history.

Microsoft knew it had flawed machines, but it did not delay its launch because it believed the quality problems would subside over time. With each new machine, the company figured it would ride the "learning curve,' or continuously improve its production. Even though Microsoft’s leaders knew their quality wasn’t top notch, they did not ensure that resources were in place to handle returns and quickly debug bad consoles. There were plenty of warning signs, but the company chose to ignore them. The different parts of the business weren't aligned.

Microsoft's strategy depended on beating its rivals to market. It couldn’t afford to stop and delay the launch in order to solve its quality problems, or so upper management believed. What Microsoft’s leaders didn't realize was that getting to market first with a flawed machine would only win them a battle; and it risked the loss of the war.

The quality problem negated much of the advantage of going first, and it has delayed the company’s plan to aggressively market the console and slash its prices. And the company believes it will sell more boxes than Sony will ... [but] the future profits that the company once hoped for are now likely to wind up in Nintendo’s pockets.

I asked Microsoft to confirm or deny 35 different facts contained in this story. Instead, I received a formal statement from a Microsoft spokesperson, saying the company had already acknowledged an "unacceptable number of repairs' to Xbox 360 consoles and responded to the hardware failures with a free replacement program. The statement also said, "This topic has already been covered extensively in the media. This new story repeats old information, and contains rumors and innuendo from anonymous sources, attempting to create a new sensational angle, and is highly irresponsible."

Sorry, but I'm calling bull@#$% on that one. The only thing "highly irresponsible" here is that Microsoft knowingly foisted buggy hardware on its users for years, now believes that "gamers have largely forgiven the company," and is actively seeking to stifle the press from telling an important and accurate story. This is disgusting and proof that Bad Microsoft still exists in parts of the company.

Thanks Matt S.

Comments

 

AMD Talk » Xbox 360 defects: an inside history of Microsoft???s video game … said:

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September 7, 2008 2:08 PM
 

BrightrevCarl said:

If Microsoft feels that parts of the story "contains rumors and innuendo," they have an obligation to correct those inaccuracies.  Clearly they think that ignoring the story is better for them than addressing it.  

September 7, 2008 2:44 PM
 

Anthony Cook said:

I Totaly agree, im a victim of 3 red lights which has happened to me twice, one of witch was with the current arcade model generation, proving the problem still exists even in new consoles!

September 7, 2008 3:49 PM
 

Interframe said:

Well, I sort of disagree and agree with you Paul on that last part.

If Microsoft didn't release its console a year earlier than Sony and Nintendo, then they would've been where they were last gen. Right now Nintendo leads the market because the caught the PS2 crowd of last gen. Microsoft knows they can't beat Nintendo, its impossible at this point. But they still have a chance beating Sony.

The article goes on saying how Microsoft' E&D Division turned a profit on June 30th 2008 for the first time ever. It also says somewhere that there making money off the Xbox business, and that was Microsoft's goal.

Although it took a long time (maybe too long) for Microsoft to respond to the problems, they did something about it. And if they knew they were going to screw up before they did the launch, than it is their fault and they paid for their actions. Although, arguably, the Xbox 360 has far more better games than the competition and far more support than last gen as well . If it weren't for the head start, they would never have any of that.

On the flip side, there is that anti-competitive and copy-cat atmosphere around the xbox business. The avatars for example is just using what they thought made Nintendo successful.

September 7, 2008 4:14 PM
 

Ocean said:

>>This new story repeats old information, and contains rumors and innuendo from anonymous sources, attempting to create a new sensational angle, and is highly irresponsible."<<

When are they going to file a defamation lawsuit?

September 7, 2008 4:19 PM
 

Lindy said:

"Although, arguably, the Xbox 360 has far more better games than the competition"

That is fading fast.  When the PS3 first arrived some games did not release for it that released for the 360 (non-exclusive).  When they did the were often late, 3-4 months later.  Now that is gone.  All major 3rd party titles are releasing at the same time now.  Plus Sony has had half a dozen exclusives come out this year.

I wont be surprised if the 360 comes in last place.

September 7, 2008 4:51 PM
 

DRWAM said:

Oh yeh? I own a Vizio 50 in PDP. Just google "Vizio pop of death" and find out how companies just want to sell at the expense [literally] of the consumer. Vizio did not grant all a second year of warranty. When I purchased, it was $3,000, which slowly made it's way down to $1,500.

Now how much did you pay for that Xbox? Pardon me I have lack sympathy.

September 7, 2008 5:44 PM
 

subzerohitman721 said:

I'd also have to agree 50% with Paul on these points.

1.) Nintendo has been convicted of violating patents from Anascape Ltd. Its also been sued by Hillcrest Laboratory for violation of several of its patents. Unlike Ocean's previous comments of them being "patent trolls", there are several companies that are using the "Freescape" technologies. In a word, Nintendo cheated to make the Wii. Violating international patents to give them the upperhand. This wasn't innovation, it was violating international patent agreements to get the upperhand against Microsoft and Sony.

2. The average Xbox 360 game still ranks higher than their Sony counterparts. Sony held back a lot of the programming information to allow developers to get its true potential out. Microsoft did not. You think thats fading? I don't think so. The 360 versions of most games outsell their PS3 counterparts. Guitar Hero III, GTA 4, Call Of Duty 4, Rock Band etc.

I don't dispute that Microsoft fumbled the football. However, Microsoft did prove something. If the Power PC processors were so bad, why in the heck did Apple keep using them? They should have switched over to Intel a full decade ago. You guys payed how much for those mid to late 90's Macs? Yet you're being critical of a $349 dollar purchase, compared to over a grand for the Macs? Sorry, I just can't seem to feel who's the bigger sucker.

September 7, 2008 10:33 PM
 

Lindy said:

@ Sub the 360 should sell more copies of all games right now.  The 360 launched 13 months before the PS3 and has something like 10 million consoles vs 4 million PS3's in the US.  So take GTAV, it should more than double the sales on the 360.

That is like saying more cars are sold in California than in Idaho, ummmm yeah the population is more than double California.

That said of the first 7 months of 2008, the PS3 has outsold the 360 in 5 of them.  The August #'s should be in soon.

Sony did not hold anything back.  The fact is Microsoft has a much better (easier to use) SDK for games than Sony does.  As they should since they are a SOFTWARE company, and Sony is a HARDWARE company.   MS also gave it away for free plus free training to get games rolling on the 360.  Sony charged for their SDK, which has been the norm until MS went down its path.  Of course MS did this now so that they could take over the market.  It took longer for PS3 programers to learn the SDK.  Example the 2008 version of madden on the PS3 was horrible.  The 2009 Madden no the PS3 is the best version and that is quoted from the developers.  In one year they learned a lot more.

Um exactly how did 90's Macs come in to play here?

September 7, 2008 11:13 PM
 

Ocean said:

>>Unlike Ocean's previous comments of them being "patent trolls", there are several companies that are using the "Freescape" technologies.<<

Nope.  They licensed it after the Wii.

So where is this tech trolls videogame system?  

Note too:  The MIT Journal of Technology called them patent trolls...not me.

September 8, 2008 12:07 AM
 

RobertC said:

Paul, whilst I agree that Microsoft should not have shipped defective hardware; the fact that they allotted over $1 billion in their financial statements for warranty repairs is more than sufficient to make amends for their irresponsibility.

That said, I cannot agree with you that Microsoft's criticisms of the article are bulls**t. The fact of the matter is that media sensationalism, unfounded rumours and innuendo and other non-factual reporting is BAD, is IRRESPONSIBLE, and DESERVES criticism. Microsoft is completely correct in that regard.

September 8, 2008 6:09 AM
 

» re: Xbox 360 defects: an inside history of Microsoft???s video game … » Grand Theft Auto (GTA) 4 said:

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September 8, 2008 7:07 AM
 

benjwah said:

Good article, thanks Paul!

September 8, 2008 7:37 AM
 

subzerohitman721 said:

@Lindy,

The Power PC platform was used by Macs for years. Bungie, the creator of Halo designed Halo originally on a Mac using Power PC's. Being that Microsoft bought and owned Bungie for a time and software developers had been playing around with both for years. Nobody said to Microsoft as development partners, "Um guys we have a problem here with the heat this sucker puts out?"

Nobody ever said to Bill Gates or Steve Ballmer, are you sure you want to use this processor that overheats? It was one of the reasons why Apple left the platform. So Steve Jobs couldn't have said, "Hey Bill, its really none of my business... But those Power PC processors really generate a lot of heat. Are you sure you guys want to use that for your next console?" Not that Microsoft and Apple compete in the video game industry. It wouldn't have hurt Jobs or anyone at Apple to help a development partner.

Or someone could have watched out for the consumers and said, "Hey this 360 and its CPU generates a lot of heat. It could lead to hardware failures." Again, its about corporate conscience of MIcrosoft and its partners. That also extends to Apple who used this platform from 1994 to 2006.

Thats where the 90's Macs come into play. I thought this would have been obvious.

September 8, 2008 8:31 AM
 

Lindy said:

Obvious???  

Sure I knew the PowerPC was used on Macs.   Apple dumped the PowerPC because they (motorola or whomever owned the PPC at the time) could never reach the speeds they promised Apple.  Apple delayed product launches several times because CPU delays.  When it comes to chip FABS Intel is king and even AMD cant match their ability to continuously shrink the CPU die's.  Motorola just could not get it right, so Apple was left with slower, hotter CPU's from them.

I also knew that Halo was originally going to be released on the Mac only, until MS offered Bungi a mountain of cash.  Which sparked a lot of controversy at the time.

All that wonderful history aside, Apple or no other company was going to tell MS "hey those CPU's are hot!"  To think that would happen is crazy!!!

Not because they are rivals in certain industries but because it just does not happen.  MS has mountains of money and a horde of smart people.  If you and I knew the PowerPC had reached its level of ability to scale with out heat problems I GUARANTEE someone at MS did.

The facts are pretty clear.  MS wanted to win this round.  They had poured billions already into the Xbox with out seeing a dime in return.  There is a ton of money in gaming to be made.  The switched to the PPC chip because the Xbox 1 was hacked to hell and back because it could run Linux easily with a Intel chip.  By moving to the PPC, and a custom one at that it made is much, much harder to hack and hence today there are NO MOD chips for the 360 that will allow you to boot Linux and run pirated games.  

Also MS wanted to look good on paper.  Sony had announced a 3.2ghz for the Cell processor.  So they pushed IBM or whom ever makes their PPC CPU for a 3.2ghz CPU.  At the time IBM only had up to 3.0ghz that was stable.  But MS pushed, so they would not look like they had less CPU.  So MS got a 3.2ghz PPC that had lower than expected fab yields because it was bleeding edge, which cause the 360 to have limited supply when it first came out.  It also gave them a .90nm CPU that was crazy HOT.  They knew all of this, it has been known for a while, with several insiders coming out and stating so....much like this article stated, and there was a link in it that went into some more detail.

Basically MS knew, and they went forward so that they could win the market over.  They put that goal before consumer satisfaction.........and it did not workout well for them in the end.  MS could have went for a 2.8ghz PPC, or better yet a Intel Core 2 CPU that would be easier to program for and been a nice cool .65nm CPU.

So no your linking Apple's history of Mac PPC's to the 360 is comparing Apples to Oranges.  The only thing that they have in common is using the same CPU architecture, one for computers and one for a game consoles, with the gaming console having a radically modified architecture.   Apple would not, or could not warn MS that the the GAMING console they were building might have problems because of the CPU choice?????????????

September 8, 2008 9:49 AM
 

DRWAM said:

" The switched to the PPC chip because the Xbox 1 was hacked to hell and back because it could run Linux easily with a Intel chip.  By moving to the PPC, and a custom one at that it made is much, much harder to hack and hence today there are NO MOD chips for the 360 that will allow you to boot Linux and run pirated games. '

That sounds like monopolistic behavior to me. Just read above for the definitions. :)

September 8, 2008 10:25 AM
 

shark47 said:

"That sounds like monopolistic behavior to me. Just read above for the definitions. :)"

Doc, Microsoft is trying hard not to finish last in the console wars. How in the world is this monopolistic? You're twisting the definition of "monopoly" itself.

September 8, 2008 10:41 AM
 

j4m3s0n79 said:

I have to say.....

I think MSs behavior here is not all that shocking and not all that bad. I think it took a lot of balls to release a product to adhere to a schedule and a business plan. I think it payed off. I think the 360 has established itself as the mainstream console of choice and the lack of exclusive content is killing sony at the moment. EVERYONE is coding multiplatform which is holding PS3 back. Had they waited, it would have been months developers would have spent learing PS3 and months that gamers would have gone without the 360. Ballsy, man...

We need to keep in mind that we are talking about video games here not medications or nuclear reactors. My 360 fried, but now, I can pick up a replacement for $199.00...yay. I also have a ps3 and if it hadn't been for MGS4 and the blueray player..it would be the most expensive dust collector in my house....lol

September 8, 2008 10:53 AM
 

gorath said:

isn't the "cell" an offshoot of PPC as well?

September 8, 2008 10:57 AM
 

DRWAM said:

Shark, you are quite correct, hence the smiley face. People are just stretching definitions here to make an argument on both sides. To be back on target, the price for an Xbox is pretty darn good for a 2 yr warranty. Plus it could last longer. Obviously I like it better as I like FPS games [although I no longer have the time since I'm now married with children], but I don't think that I am too biased to make a decision on the cost vs features and warranty. ALL of my dealings with MS customer service have just been the best. My Vizio PDP got replaced only after I emailed customer service and threatened to post bad reviews about their lack of quality all over the web. They responded in one hr, but only after they told me that the 1 yr warranty on a 3 thousand dollar PDP that has know failures [pop of death] had expired. Dude, I even bought a 5 yr warranty because they were exploding, but the warranty company [sold through Vizio] did not respond for 12 days. The power the web gives you can be amazing.

September 8, 2008 11:13 AM
 

shark47 said:

"Shark, you are quite correct, hence the smiley face."

Sorry, I missed that. :|

I am actually leaning towards buying an XBox Premium, now that it's $100 cheaper than a PS3. Yes, a PS3 includes a BluRay disc, which makes it attractive, but I'm not really interested in BluRay discs at this point. My only fear is the RROD. I don't know if the reliability problems have been solved and that's stopping me.

September 8, 2008 11:29 AM
 

DRWAM said:

We never considered the Xbox testing environment. I may have been a nice cool place with plenty of airflow, preventing overheats. Going back to my prior posts, I built a PC that ran flawlessly in my nice cool basement, then overheated when I brought it upstairs to my much warmer office, and shoved it into a tight cubby [that was 3 yrs ago and I since cut the back out of the cubby and pulled the box out of it a little. I already had many case fans and a better CPU cooler]. So MS may not have know the full extent of heat problem. Lets face it, no one can predict outcomes of every scenario.

BTW, since I can't do anything today because of my leg, I'll be throwing grenades onto your discussion table and watch you all attempt to disarm them:)

Doc

September 8, 2008 11:31 AM
 

gorath said:

It might be worth adding that one of my friends has had several PS3 failures, due to overheating, even though the system doesn't appear to be restricted of airflow at all. However, he is the only person I've ever known, or even heard of, to have this issue.

Getting a replacement device, however, was very pain free, and the service he received was certainly on a par with that received by the xbox 360 owners.

September 8, 2008 11:59 AM
 

Lindy said:

"I think MSs behavior here is not all that shocking and not all that bad. I think it took a lot of balls to release a product to adhere to a schedule and a business plan."

Or the balls to release it knowing the would have much higher than normal failure rates.  Screw Joe User, as long as in the end we (MS) own the gaming industry.  Pretty much MS SOP.

"lack of exclusive content is killing sony at the moment."  Really?  So MSG4 outsold all other games the mont it was released on all platforms and the PS3 also outsold the 360 that month.  This fall there is Socom which will be a HUGE hit among the FPS crowd, Resistance 2, Little Big Planet, Motorstorm 2 and down the road you have Gods of War III all exclusive to the PS3.  MS did take a few but most of them are for the 360 and PS3, ala Final Fantasy.  Plus games like Oblivion and BioShock that released later come with more or polished content.  Oblivion on the PS3 vs the 360 is night and day.  It looks better after a year of enhancements, it loads WAY faster because its allowed to use the hard drive, and the add ons come with the game, where 360 users had use MS points to get them.  BioShock is also going to have more content on the PS3 version in November.

I cant imagine who would buy a Hard Drive-less 360??  Unless you were only using it as a media extender that could only stream content.  When a game releases a patch, where does it install, on the Memory stick you have to buy????  Also there is costs that people dont think about when buying a 360.  I bought re-chargeable batteries, and charging stand and WiFi.

September 8, 2008 12:21 PM
 

Lindy said:

@shark, if you bought a 360 today I think you would be safe.  The latest ones, have a cooler GPU (.65nm) bigger heat sync and new motherboard that uses less power.  Next year they are coming out with a version that will have a .65nm CPU and GPU possibly on the same die, which will make them even cooler running.

The latest PS3, 80gig with dual shock controller at $399, released 3 weeks ago, has a .65nm CPU and GPU, which dropped its peak power usage by 70watts, and made the cool running PS3 even cooler.

September 8, 2008 12:29 PM
 

DRWAM said:

That's actually great to hear that the problem was addressed and was/is to be fixed. Still it's kinda hard for me to believe that MS knew how bad the failure rate would be, since massive failures would certainly put the kibosh on future sales,  even if MS wanted to be first on race day.

September 8, 2008 1:15 PM
 

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