The infamous Xbox 360 "red ring of death" (indicating a failed unit) has caused Microsoft - and its customers - untold pain in the three years since the console's launch in 2005, and cost it $1.15bn (£738m) last year. Microsoft has never said publicly why the console was plagued with faults: it seems that poor production quality was at the heart of the failures - an all-round problem with no single cause except impatience on the company's part as it tried to become the leader in videogame consoles.
It was an ambitious attack. Microsoft's engineers started working on the Xbox 360 at least a year after Sony's engineers began work on the PlayStation 3, yet wound up shipping a year earlier. With the first Xbox, the company lost $3.7bn (£2.3bn) over four years, mostly because costs of the box - particularly its hard drive - were too high. Bill Gates didn't really care about the losses; that was simply the ante for getting into an exciting new business. But Steve Ballmer, who took over from Gates as chief executive during the first generation, really wanted the Xbox business to be profitable second time around.
Theres much more to this article and its a very intersting read. I just didn't post it all because it was so big, most of it is about how careless Microsoft was and how they were so desperate to get the console out that they ignored the problems it had and figured they could fix them with a patch. Also one part they said that they had shipped more than 3.3m consoles to retailers. But there was a growing "bone pile" of more than 500,000 defective consoles in a warehouse at Wistron and a repair centre in Texas - either duds off the factory line or returned boxes, according to sources.
Hopefully Microsoft won't be so careless with the NexBox.
http://www.guardian.co.uk/technology/2008/nov/13/xbox-truth
