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Expanded Xbox warranty to cost Microsoft $1B

Posted: 09 Jul 2007 ?? ?Print Version ?Bookmark and Share

Keywords:Xbox 360? game consoles? hardware failure?

Microsoft Corp. announced it is expanding the global warranty coverage for the Xbox 360 game console to three years from date of purchase. Customers who experience general hardware failure, as indicated by three flashing red lights, may avail themselves of the free warranty service. All other existing Xbox 360 warranty policies remain in place.

Admitting "an unacceptable number of repairs" to Xbox 360 consoles, Microsoft conducted extensive investigations into potential sources of general hardware failures. Having identified a number of factors, the company has made improvements to the console and is enhancing its Xbox 360 warranty policy for existing and new customers.

Microsoft will take a $1.05 billion to $1.15 billion pre-tax charge to earnings for the quarter ended June 30 for anticipated costs under its current and enhanced Xbox 360 warranty policies.

"The majority of Xbox 360 owners are having a great experience with their console and have from day one. But this problem has caused frustration for some of our customers and for that, we sincerely apologize," said Robbie Bach, president of Microsoft's entertainment and devices division. "We value our community tremendously and look at this as an investment in our customer base."

Microsoft will retroactively reimburse customers who have previously paid repair expenses related to the three flashing lights error message on the Xbox 360 console.

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