This report is hardly conclusive, and it assumes that all failures were returned directly to them. It's a broken report as most people call MS first and get their replacement directly from them. Further, a lot of these warranties do not cover you if MS will still replace it.
The failure rate is way, way above 16%. Most likely way above 30%. Look at the gaming press as a sample: Joystiq had 9 out of 10 of their Xbox owners replaced it at least once. This is a > 90% failure rate. Arstechinca had one reporter with 4+ failures and another with multiple failures also.
Claiming the failure rate is 16% or even anywhere in that ballpark is outright denial and flies in the face of all of the evidence we see. Including, but not limited to, the amount of Money MS set aside for repairs. Do you really believe it costs them $1000 to repair a unit? Chances are it is much, much less (under $100) and chances are they'll have to issue additional funds to keep the repair process going.
The former MS employee said the failure rate was "about 30%", and he'd have a lot better information than a tiny sample warranty reseller.
We have no real information here. Just some company claiming the failure rate is much, much lower than it appears to be. Even at 16%, the 360 would officially be the shittiest hardware ever released into the home console market (not surpring that it's from MS as no one would expect that from Sony, Nintendo or Sega), but claiming that it's 16% based on some poor data is just silly.
