Soon after the launch of the Xbox 360 in 2005, some customers found their console unusable. The console's way of telling people something very bad had happened was by displaying three flashing red lights, what was dubbed the "Red Ring of Death".
The problem got so bad that in 2007 Microsoft put aside $1.15bn to cover an unprecedented repair offer that meant affected customers would get a fixed Xbox 360 as quickly as possible while extending the console's warranty to three years.
Now, eight years later, Peter Moore, now of EA but then of Xbox, recalled the Red Ring of Death furore in an IGN podcast also starring current Xbox boss Phil Spencer and Seamus Blackley, one of the creators of the original Xbox.
"We were seeing failure rates and starting to get reports through customer service," Moore said.
"This was a thing where we couldn't actually figure out what was going on.
"We knew we had a problem. I remember going to Robbie Bach, my boss, and saying, I think we could have a billion dollar problem here. As we started to do the analysis of what was going on, we were getting the defectors in, it was a challenging problem for our engineers, and we couldn't quite figure out what it was. We knew it was heat related. There were all kinds of fixes. I remember people putting wet towels around the box."
"I calculated with my finance team, Dennis Durkin (now the Chief Financial Officer of Activision), Doug Ralphs (then Senior Director of Finance at Microsoft's Interactive Entertainment Division)... $1.15bn, right out there. I always remember $240m of that was FedEx. Their stock must have gone through the roof for the next two weeks.
"And, I am trembling sat in front of Steve, who I love to death, but he can be an intimidating human being. Steve said, 'okay, talk me through this.' I said, 'if we don't do this, this brand is dead. This is a Tylenol moment.'"
"He said, 'what's it going to cost?' I remember taking a deep breath, looking at Robbie, and saying, 'we think it's $1.15bn, Steve.' He said, 'do it.' There was no hesitation.
"I'm thinking, I'm about to crater Microsoft's stock. Actually, nothing moved."
Blackley said while speaking to the likes of Steve Ballmer and Bill Gates was an intimidating experience, they were willing to help solve problems.
"It was that moment of decision that Steve Ballmer made, that I will never forget. He didn't even think twice about spending $1.15bn to protect a brand that's probably worth three or four times that today.
"Xbox One wouldn't have happened."
Source: http://www.eurogamer.net/articles/2015-07-02-peter-moore-recounts-xbox-360-red-ring-of-death-saga
