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It's tough to put a number on the failure rate since the hardware has improved so much over the past four years. It's reasonable to assume that all launch consoles will eventually fail but the newer ones seem to fall into the more reasonable less than 10%. Hopefully someday someone will distinguish between each type of 360 console and get some real numbers.

I find the custimer service part a little strange, turn around time on my 360 was under 2 weeks from start to finish, and the customer service rep was always polite.