I've seen some people on forums throw around 30% or more outrageous numbers like 50-60%. The 16% number is from a company that deals in selling warranties and it also mentions that the number may only apply to older 360s (pre-Falcon).
http://www.1up.com/do/newsStory?cId=3166259
Report Claims Xbox 360 Failure Rates at 16%
Significantly lower than some estimates, but higher than Microsoft's.By Steve Watts, 02/13/2008
"There's been a lot of press about Microsoft's red ring problem. Estimates of the problem have been all over the map, and when he was working for Microsoft, Peter Moore referred to them as a moving target. Company estimates pinned it at a fairly normal 3%, while some retailers have put the percentage as high as 1/3 of all systems.
A new report claims the truth is somewhere in the middle. SquareTrade deals in selling warranties for electronics, and has amassed their over 1000 warranty claims to come up with some interesting data. The findings were a 16.4% failure rate of Xbox 360 systems, versus a roughly 3% rate for the Sony PlayStation 3 or the Nintendo Wii with sample sizes in the high hundreds. The well-known "Red Ring of Death" error accounted for about 60% of those hardware failures, and thus most system-breaking problems are covered by Microsoft's extended warranty plan.
SquareTrade CEO Steve Abernethy speculated that the future may see an even higher percentage. "It is reasonable to believe these failure rates will increase over time, since the Xbox 360 failure issues tend to increase with prolonged use where overheating appears the main culprit," he said. Abernethy went on to note that while the company didn't track the different variations of the 360, he "would estimate most if not all were the original motherboard."
In taking statistics, the two most important factors are sample size and randomness. By using a pool of over 1000 redeemed warranties, the report's sample size is sufficient. On the other hand, since the sampling was taken from people who have to seek SquareTrade's warranty service out, the possibility exists that the randomness factor could be skewed, leaning towards heavy system users who are more likely to overheat their 360s. This doesn't invalidate the report by any means, but it is worth keeping mind.
1UP has contacted Microsoft for comment, but as of press time we haven't received a response."
