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XBox (Games) Microsoft Entertainment Games

A History of the Xbox Red Ring of Death Fiasco 230

Posted by Soulskill
from the defective-by-what,-now? dept.
VentureBeat has a lengthy story about the situation surrounding the Xbox 360's "Red Ring of Death." It starts with the developmental phases for the 360, looks at the marketing decisions that drove Microsoft to aim for a release ahead of the PS3, and talks with sources and engineers within Microsoft about what could have been done to prevent the problems. Quoting: "Leading up to the launch in the fall of 2005, the number of defective units would soon grow to tens of thousands. Any other consumer electronics company would likely have postponed a launch with such low yields. But Microsoft had more money in the bank than anyone else. The decision this time would fall to Bach and Moore. The costs of launching with low yields -- where you take big losses on every product sold -- could bankrupt other companies. But Microsoft could afford to do so. Microsoft did delay the launch date from October until November. But some inside the company still believed returns would be out of control."
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A History of the Xbox Red Ring of Death Fiasco

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  • by Scaba (183684) <`moc.aicnarfeoj' `ta' `eoj'> on Friday September 05, 2008 @10:10PM (#24897045)

    Have you tried Googling the word "dumping"? Because the first link explains it.

  • by MobileTatsu-NJG (946591) on Friday September 05, 2008 @10:10PM (#24897049)

    I'd appreciate it very much if someone could please explain to me, how is it possible that one company sells something at a loss and it's called "dumping" (which you can get in trouble for, IIUC), and another company sells something at a loss and it's called a "loss leader?" Wtf?/quote

    As I recall, 'dumping' is when you sell a product considerably more cheaply in one country than in another. For example: If Sony sold the PS3 in the US for $200, but the equivalent of $700 in Japan, that'd be 'dumping'.

    Hopefully for both of us, my memory is correct. ;)

  • by moderatorrater (1095745) on Friday September 05, 2008 @10:13PM (#24897071)
    As I understand it, the difference is that a loss leader can legitimately expect to make money indirectly from the sales. Walmart can afford to sell its most popular items at a loss so that other items can be sold for a profit. Microsoft does this with the XBox, where they sell the XBox in an attempt to get more sales for their software.

    Dumping, on the other hand, is selling at a loss so that you can drive the other company out of business and then raise the price of that same item.
  • by nascarguy27 (984493) <nascarguy27@gmai l . com> on Friday September 05, 2008 @10:25PM (#24897137)
    "If a company exports a product at a price lower than the price it normally charges on its own home market, it is said to be "dumping" the product." --from Wikipedia [wikipedia.org]

    "A loss leader...is a product sold at a low price to stimulate other, profitable sales." --from Wikipedia [wikipedia.org]

    The XBOX is a loss leader because people will buy it at its cheap price, then people will want to play the XBOX. Those people will be required to buy games. The games are high margin products. Microsoft makes both so it's all good for them. It's just like with printers and ink or razors and blades. Microsoft would be guilty of dumping the XBOX if they sold the XBOX in say Europe for 20 USD, which I don't think they do.
  • by ucblockhead (63650) on Friday September 05, 2008 @11:19PM (#24897501) Homepage Journal

    If the XBox 360 was an attempt at dumping, then it was a completely failed attempt. But given that in the console market, selling the console below cost and making the money up on sales is the historically common way to do things, it's more reasonable to believe that they were selling it as a loss leader like everyone else. This is certainly the way the PS2 was sold. It was a monster hit, and yet hardly drove either Nintendo or Microsoft out of the console market.

    The remarkable thing about the current generation was that Nintendo was able to sell a console at a profit.

    Beside, nothing shady is going on. Both Microsoft and Sony have been very clear about when they are selling at a loss.

  • by Kemanorel (127835) on Friday September 05, 2008 @11:30PM (#24897573)

    You do realize that Microsoft, Sony, and Nintendo all receive a licensing fee or percentage from every game sold, yes? While they may make more money off 1st party games, 3rd party games still bring in a nice chunk of change as well.

    You also might want to check the stories of each system when they first came out. There are plenty of indicators that both X-Boxes and at least the last two PlayStations were sold at a loss, and if not a loss, then a very minimal profit margin. Nintendo is the only system maker to consistently release systems at a healthy profit. Not a loss, nor anywhere near the break-even point, but a decent enough profit that they have some very fat stacks of cash on hand.

  • by lanner (107308) on Saturday September 06, 2008 @01:52AM (#24898193)

    Well, it does coincide with my personal experience of the Microsoft Red Ring of Death. My XBox 360, bought in late 2006 if I remember correctly, just died a few weeks ago and we recently got the replacement back. Adult-only home, well ventilated and treated properly.

    Units will continue to die for years to come. For us owners, this problem will continue for a long time.

    Most XBox 360 consoles before the recent hardware changes will die with unreasonably short lives. It's just a matter of time. It's a design flaw, not a manufacturing flaw.

  • by hackerjoe (159094) on Saturday September 06, 2008 @02:34AM (#24898403)

    For most people shipping costs are in fact free. The replacement process is not without hassle -- I had to request a box 3 times before actually getting one, though you could legitimately blame their shipping company for that -- but the whole thing never cost me a dime, and I had my '360 back within two weeks of sending it off. I live in Canada; I don't know how it is overseas, of course.

    (For reference, the process is this: you call their toll-free line, spend about 10-20 minutes going through an automated system and then waiting on hold, then talk to a person for a few more minutes. A couple days later there's a box on your doorstep, which you pack up and send off at no cost. A week or two later the console comes back fixed. They'll do this for any '360 purchased ever, if you have RROD -- I worked on a "launch window" title and had one I got on launch day direct from MS.)

  • by zoney_ie (740061) on Saturday September 06, 2008 @04:49AM (#24898875)

    PS3 is doing just as well (if not better in Europe) taking the headstart of the 360 into consideration. It'll be with us a lot longer than the 360 also - should be as long lived as the PS2 (which is still selling).

    And that's considering the PS3 is still quite a bit pricier than the Xbox360 - there are plenty of folks who would like a PS3 and are still waiting for the price to come down, or will get it this Christmas coming.

    I'm happy with my sole recent purchase from the console manufacturers - a Nintendo DS. My Dell PC from 3 years ago (with two years on-site warranty left) still handles my main gaming requirements, albeit €150 spent on an X1950PRO 512MB last year.

    I see little point to the latest consoles without HDTV screen, and for one that has almost as good colour/contrast as a CRT and true 1080i HD (not downscaling to arbitrary poor resolution), I would spend enough to buy *two* gaming PCs. Even the average HDTVs, many of which are "HD ready" with like 1024x768 resolution, are almost the price of a new PC!

  • by inviolet (797804) <slashdot&ideasmatter,org> on Saturday September 06, 2008 @09:10AM (#24899999) Journal

    I'll explain the difference, Dumping is when a company sells a product below cost to bankrupt their competitors. Loss leaders are when a store sells a product below what they pay to draw in consumers and get sales.

    'dumping' has a specific meaning in economics, and it refers to the practice of selling product in another country at a price far below that country's local cost. This can happen when the seller's country gives him a subsidy that lowers his costs. Tariffs are used to counteract that. A nice example of dumping and tariffs is the ongoing US-Canada softwood lumber squabble. We are currently on version IV of the agreement now and it still ain't right.

    What you called 'dumping' is actually called 'predatory pricing'.

    Dumping can be done as an act of predatory pricing, but not necessarily.

  • by MobileTatsu-NJG (946591) on Saturday September 06, 2008 @01:54PM (#24902103)

    "Uh that is just two examples. How about the SNES, NES, Genesis, GBA, DS, PS2, PS1, etc?"

    Small nitpick: The PS2 was sold at a loss, too. The only person arguing with that is 'Gord' and his 'evidence' is highly questionable.

  • by sabre3999 (1143017) on Tuesday September 09, 2008 @12:44PM (#24934371)
    I've had my "Lemon" since launch and have had no problems whatsoever... which I suppose puts me in the upper 66% of consoles.

    Or maybe it's that I took proper care of it, keeping it well ventilated and all. Many people are hard on stuff. Pretty much all of my buddies have 360's, and the only ones that have returned theirs were the ones that DIDN'T listen to the rest of us (stuck it in a closed cabinet and left it running for 3 days, moved it while it was playing, etc.) They're the same people who think they can overclock their PCs to 6GHz without having the expensive memory or an elaborate cooling system and then STILL shove them in their desk cabinet.

    Just my take on the entire RRoD thing. I know the cause, and it is caused by a case of bad engineering... but if you treat your consoles like you'd treat your Ferrari, it wouldn't overheat and break the solder points. To me it's just plain common sense to keep it ventilated.

Put your Nose to the Grindstone! -- Amalgamated Plastic Surgeons and Toolmakers, Ltd.

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