Microsoft Will Drop $1B on Xbox Warranties

Company calls number of defective consoles 'unacceptable'
By Sam Biddle,  Newser Staff
Posted Jul 6, 2007 5:39 AM CDT

(Newser) – Microsoft will respond to complaints from around the world by extending the warranty on its faulty Xbox 360 gaming console, at a potential cost to the company of over $1 billion, USAToday reports. The company will extend warranty coverage from 1 year to 3 in response to buyer reports that hardware defects are causing their consoles' spontaneous demises.

Disgruntled gamers call the signal of abrupt system failure the "red ring of death" (a reference to the blinking lights on the console). Results for the fourth quarter, which ended June 30, will reflect the pretax charge. Microsoft's expensive admission of "an unacceptable number of repairs" didn't seem to faze investors: Its stock fell only 11 cents in after-hours trading.