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A History of the Xbox Red Ring of Death Fiasco 230

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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  • Collapse? (Score:3, Interesting)

    by Elektroschock ( 659467 ) on Friday September 05, 2008 @10:11PM (#24897053)

    What if the company is just facing the domino effect of collapse because their engineering and management does not work anymore. It makes me depressed to observe all this. [slashdot.org] They were unable to deliver VISTA in time. Customers and hardware suppliers actually hate VISTA.

    They develop a game console with gigantic losses. They develop the next game console as a second choice. Maybe something is broken in their management of development. I mean look, where is the bugzilla server for the xbox?

    Do you remember the story about the lawyer's letter to the parents of the baby killed by an Xbox fire?

    But this Slahsdot post finally reminds us that Microsoft was never different. When we look back there is actually a history of autism in the company but it always paid off in the past. Like Napoleon, an insane leader who did every mistake but for some time he was quite lucky.

  • by kesuki ( 321456 ) on Friday September 05, 2008 @10:26PM (#24897157) 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.

    Clearly the video game industry is rife with corruption and 'Dumping' primarily because hardware makers can subsidize the price of a console with license fees from game developers.

    depend on 'dumpers' like Microsoft to have some very complex bookwork, and possibly some Chinese shell corporations to sell high priced parts significantly below cost, but only to Microsoft.

    there are lots of ways electronics can be sold below price, specifically cell phones and satellite TV boxes, which come with service agreements. but in the cell phone market, you're not locked into a single phone, although each cell provider has their own line of phones... most big players have models for each provider, except in cases where they get more money to be 'exclusive' to AT&T (like the iphone) etc.

    some of this stuff is illegal in many places, but as i said shell corporations are shady and hard to stop. because billionaires often engage in venture capitalism, it's not hard to 'invest' in a shell corporation that's going to go into an exclusive contract to say, sell 40 million $40 dollar parts at $1 a part, and have the initial VC funding of say 40 million dollars, while 'your buddy' makes a cool million cash etc... then let the company go belly up, or keep using the same shell corporation with additional rounds of VC funding...

  • by Frag-A-Muffin ( 5490 ) on Friday September 05, 2008 @10:41PM (#24897275) Homepage

    We've seen it time and time again, how Microsoft can afford to buy it's way into a market segment. I wonder if it will pay off in the long run, because it seems they've hit a saturation point with this product they have. Not much growth over the last product revision, and barely making a penny in the last few quarters (let's not talk about making up for all the loses to date yet).

    With the stock price stagnant, how long can upper management convince shareholders that this is the right thing to do?

  • by lysergic.acid ( 845423 ) on Friday September 05, 2008 @11:02PM (#24897399) Homepage

    i don't think that is what's usually meant by 'dumping'.

    although it does seem to primarily refer to predatory pricing in the context of international trade, it's not when you sell something cheaper in one country than in another. it's simply when a product manufactured in one country is being exported to another country at a price below cost or below the market value in its home market.

    as with most forms of predatory capitalism, its legality is fuzzy and often what one nation preaches is not what it practices--particularly western nations which like to tout the virtues of "Free Market" capitalism, such as the U.S.

    so if a U.S. corporation wanted to dump products on another nation, they would condemn any protectionist policies which might oppose these actions. but simultaneously, if another country wanted to dump products in the U.S. which competed with domestic industries with powerful lobbies, antidumping petitions would be filed with the Dept. of Commerce.

    things like 'fair value', or the difference between 'dumping' and selling a 'loss leader', are entirely subjective. they're simply used in whatever way most benefits a given group.

  • by Anonymous Coward on Friday September 05, 2008 @11:17PM (#24897493)

    Funny, then, that it is still beating the shit out of the PS3. And that the PS3 is losing nearly every exclusive it once had, as third parties realize that they'll never get the audience that they would with the 360.

    Go ahead and keep justifying your console-buying decision, though. The rest of us will just keep laughing at you.

  • by sjbe ( 173966 ) on Friday September 05, 2008 @11:21PM (#24897513)

    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?"

    Dumping [wikipedia.org] is a form of predatory pricing [wikipedia.org] under international trade law whereby a product is sold below cost or below market value in the country of origin. Economists sometimes take a more general definition of dumping to mean any kind of predatory pricing but in my experience this is a less common usage. Dumping often occurs when a producer has excess capacity beyond what their home market can absorb so they sell the excess in a different market either to damage current/potential competitors or to gain market share.

    A loss leader [wikipedia.org] is basically a sales promotion. One product is sold cheaply (possibly below cost) with the expectation, but normally not the requirement, that customers will be enticed into buying additional more profitable product(s). The most famous version is the razors and blade model pioneered by Gillette.

    The important difference is that a loss leader isn't necessarily destructive. With dumping there is no attempt at profitability, at least not in the short term. However predatory pricing in general, including dumping, can be very hard to prove. It's quite rare to have clear evidence that dumping is occurring. Furthermore in some countries (notably China) it's not unusual for the government to hold stakes in manufacturing firms. Naturally it is rather difficult subpoenaing records from a state owned Chinese manufacturer so you can sue them for dumping.

  • RROD (Score:2, Interesting)

    by Narmacil ( 1189367 ) on Friday September 05, 2008 @11:39PM (#24897619)

    I was playing Halo 3 the other night and my network connection was acting up, then the game lurched, froze and put tons of bars across the screen, followed by a loud screeching noise

    so yeah, my Xbox RROD'ed on Sept 1st. I think its kind of odd that this story would pop up on /. within a week of it happening to me. I should pry call Microsoft sometime soon to get it replaced, but seeing as I'm a busy engineering student I haven't gotten around to it yet. Does anyone have any tips for dealing with Microsoft concerning this problem?

    wish me luck

  • by Anonymous Coward on Friday September 05, 2008 @11:42PM (#24897633)

    It's true that many 3rd parties are releasing on both the 360 and PS3 now to help widen their audience. However, if you look the 360 doesn't exactly have a huge number of exclusives coming out, if you count them there are actually fewer exclusives coming out for the 360 than there are for the PS3.

    You mention that the 360 will have a larger audience than the PS3, this should be true; however, recent multi console releases have seen less than one million units more sold on the 360 than the PS3, this is with the PS3 having 6 million units less sold to gamers.

    So just like it doesn't make sense for 3rd parties to only release on the PS3, it also doesn't make sense to only release on the 360.

  • by Dripdry ( 1062282 ) on Friday September 05, 2008 @11:42PM (#24897635) Journal

    It depends on emotion. if people *think* the stock is worth the price, they'll hold it or buy.
    Apple is in the same boat.

    I think MS is in a precarious position. If one of their bets doesn't pay off soon (XBOX, Vista, or otherwise) I think they will have a few people to answer to.

    Lowering the price seems like a desperation move, although the system HAS been out for 3 years now.

  • by Dripdry ( 1062282 ) on Friday September 05, 2008 @11:47PM (#24897667) Journal

    Worst console? Hm.

    There DOES seem to be a big following online for it with Live. It's pretty cool to play all those old games on the system, and I do know a fair number of people who use the system a lot.

    Train wreck? I agree. Will it continue on? Probably. Flawed and broken, though fortunately people actually have a choice in the console market.

    It would, however, be interesting if XBOX dropped out and left only Sony and Nintendo.

  • Competition (Score:3, Interesting)

    by OvERKiLLsFFT ( 986079 ) on Saturday September 06, 2008 @12:09AM (#24897783)
    I think that Xbox is the best thing that happened to PlayStation. In the real world, there is nothing like a little competition, especially direct competition. From Wikipedia's article on competition: "Merriam-Webster defines competition in business as 'the effort of two or more parties acting independently to secure the business of a third party by offering the most favorable terms.' Seen as the pillar of capitalism in that it may stimulate innovation, encourage efficiency, or drive down prices, competition is touted as the foundation upon which capitalism is justified."
  • by Anonymous Coward on Saturday September 06, 2008 @05:06AM (#24898931)

    The WHOLE reason I have still not purchased a XBOX360 is the Red Ring Of Death fiasco.

    I come here, and I have to admit, I'm a marketer, not an engineer. So maybe I can best shed some light on Robbie Bach's statement and what I've quoted above.

    1) You are NOT one of Microsoft's consumers. You never bought a Xbox RROD, so you don't count. You can't forgive them anymore than you can forgive my wife for cheating on me. Got to love marketing "math"...

    2) Most people I know who bought a Xbox RROD are happy... they're totally fine with it. I know one guy who suggested I buy one, than proceeded to tell me he owns 3 so he always has one working while the other ones were going in for repairs. Another guy I know has a failing 360 that is not under warranty (the disc drive is failing, which is not RROD). He makes $6.50 an hour. He's going to buy another one when his dies. Why? He places more value on playing his 360 than he places on his kids. So I can completely believe Robbie Bach when he says "Gamers have largely forgiven the company for defective Xbox 360s"

  • by dindi ( 78034 ) on Saturday September 06, 2008 @05:58AM (#24899183)

    The point of the post was, that while the xbox is a limited hardware, the whole experience of the xbox live system is really fun (for me).

    However, that POS died on my, so I am here with a $500 dismantled box and peripherals, and 10 games ($600) as a waste. And I refuse to buy a piece of hardware that already died on me once because that is just stupid. I heard of people who have 2-4 xboxes, all which died.

    On the other hand I took a quick view of other options, and mentioned that the WII does not interest me because my taste of games are not there. The thing is underpowered and can not run call of duty, GTA4 (just an example, I am not a GTA fan, even though I try every time, then get bored of it after a while) and/or support 16+ online shooters. I have limited time to play, so I prefer going online, shoot some people, then do my other things, not to play a story based game for 30+ hours. OK I finished metal gear solid and it took long, so there are exceptions, but like one a year.

    Then I looked at the system I got when the POS died. It is the PS3. Superior design and quality. I know, that some people have things against sony, but I am happy with their amps and video components. I have a camera I use for diving from sony which also server the purpose, but it was the 1st and last sony camera I got. So I am not a Sony fanboy. I would also never buy a sony ericsson phone after I had one and it died on me..... (I have a Nokia I hate and an iPhone I love even though it lacks important functions) ....

    So even though I love this superior console, I do not like the online experience. The idea of giving a headset with XBL is great, because everyone has a headset that works and people use it. Sony's idea of allowing any bluetooth headset is great in theory, but most headsets are designed for phone applications, so they die after a few hours of actual talk time, and they let all the noise in. This is especially true with shooter games, and is rather annoying. There is also static, disconnects, all the bad stuff.
    Many people do not use a headset, making a tactical shooter -SHIT- of an experience.

    Also XBL allows people to rate people, which takes care of team killing, offensive behavior and talk most of the time. PS3 lacks these, so you have to deal with assholes who cannot play, and so they go into a no-respawn 10 minute tactical game, and shoot you from the back at the spawn point and log off. Yes, this is annoying, and yes it happens on XBL, but then the person gets a bunch of bad reviews and it shows on his account......

    anyway ... it is 4am in the morning, I just could not sleep and saw all these responses...

    Then again, I did not want to offend any WII owners, I wish I enjoyed my superior expensive box as much as people enjoy the cheaper, lower performance little white cubes .......

    And sorry for the kiddie comment again. I play tactical team shooters almost exclusively, so anything else for me is in the kiddie category.

    Oh... I am not a killing or military freak at all, I do not hunt or kill anything (I am in fact a vegan), it is just my competitive self that finds enjoyment in fighting in a team against an other set of people.

    I would also play a real WWII plane combat sim if it existed and was as good as Chuck Yeager's sim back in the old days....... but it is all about locking a missile on someone from 10 kilometers in a jet, then hear beep beep for 2 minutes and see a distant explosion .. -> not fun ...

  • by Caboosian ( 1096069 ) on Saturday September 06, 2008 @06:15AM (#24899263)

    The difference here is that the Xbox cost them a huge amount of money (I don't think they ever made a profit off an Xbox sale), and did not benefit from integration of parts. For instance, one of the most acclaimed bonuses of a 360 (by developers) is the integrated memory (I'm not a hardware engineer, so if I'm off here, correct me). The fact that the memory can be used both as video ram and standard ram allows for serious optimization benefits.

    Just throwing together some PC parts doesn't make it better. It may be more reliable and save on R&D costs, but a console like a PS3 would blow a PC equivalent (512mb RAM, 6800GT, let's not talk about the CPU) out of the water. In the console market, you have to build a "console" and not a PC, otherwise you'll never bring down the cost sufficiently, and it won't have a very good lifespan (graphically).

  • by Naughty Bob ( 1004174 ) * on Saturday September 06, 2008 @07:12AM (#24899457)
    Too expensive, correct- I'm rarely an early adopter, save for a few specific subsets of gadgetry, and who knew they'd slowly lose functionality, rather than gain it?

    On a side-note CronoCloud- How did you play Oblivion on a PS2?

    (Lastly, thank you mods for the +3, Troll above- I feel I've finally arrived)
  • by mc moss ( 1163007 ) on Saturday September 06, 2008 @07:12AM (#24899465)
    They haven't been resolved. Although the rate of RROD isn't as high as before (it was around 33% before), it still happens to the newer consoles.
  • by Anonymous Coward on Saturday September 06, 2008 @01:35PM (#24901875)

    Not sure of the validity of this claim, but an EE friend of mine claims to work with an ex-Microsoft Xbox EE. The story goes that supposedly Microsoft has an "in-house software only" policy with regards to all product development. However, an industry standard production management software package, which I can't for the life of me recall the name of, was being used at the very beginning of the 360 production process. Once the big wigs at MS discovered this, they demanded that the production software be changed to a Microsoft-created alternative....and the rest is history.

    No idea about the validity of this story, but there you have it.

  • by Anonymous Coward on Saturday September 06, 2008 @05:09PM (#24904349)
    The 360 is cheaper out the gate, but they did it by stripping features or counting on add-ons. * Rechargable controllers - free on PS3, +$20 each with the 360. * Wireless Internet - free on PS3, +$100 with the 360. * Harddrive upgrades - off-the-shelf part for PS3, proprietary on the 360 ($180 for 120 GB - WTF) * Play online - free on the PS3, +$50/year on 360. Couple the higher failure rate of the 360, how friggin loud it is, the crappy points system on Live (doesn't even equate to 1-to-1 points to cash like at least the Wii), and any value Bluray may have for you, and all of the sudden the 360 isn't so much a great value. I don't understand why so much of Slashdot is tripping over themselves to "defend" the 360 and bash the PS3. ** DISCLAIMER - I own both.
  • RROD (Score:1, Interesting)

    by jkeelsnc ( 1102563 ) <jkeelsnc@yaho o . com> on Saturday September 06, 2008 @09:41PM (#24906721)
    I do not like Microsoft as a company for this reason. They have a history of releasing products that have great potential but too many defects and high failure rates. They rush something out the door stuffing sh&% into stores before it is ready. I like the games for the Xbox 360 and its capabilities are still pretty good among the current generation of consoles. However, their reliability record is unacceptable both with the Xbox 360 and with Windows. My next computer will be an Apple. Thanks a lot Micro$oft. Focus on Office and development tools like Visual Studio that are brilliant instead of trying to sell crap like Windows and Xbox 360.

Heuristics are bug ridden by definition. If they didn't have bugs, then they'd be algorithms.