A letter from Peter Moore:

http://www.xbox.com/en-US/support/petermooreletter.htm

Synopsis: all Xbox360s -- including those already purchased -- are now covered by a three year warranty plan. This is (retroactively) applied immediately.  

Wow is all I can say.  

It's going to be a while before Microsoft's entertainment division enters the Land of Black Ink.

Good news for 360 owners. I guess they're finally taking that "concentrate on how we deal with the problem" crap seriously, and it was probably the recent spate of failure-rate reports that spurred them to do it. This story was bound to hit the mainstream eventually, and they're trying to head it off.

Dang.

Even if people are afraid of buying a 360 because of the fail-rates, they've got an amazing 3 year warranty to make them feel better.

It's the next best thing to actually fixing the hardware.

Holy poop on a stick. Very nice!

This is going to cost Microsoft 1 billion dollars apparently!

http://www.msnbc.msn.com/id/19620158/

They can definitely afford it, even though it probably sends their plans of making a profit with the Box even further into the future.

1 billion dollars because they made a crappy system.

http://www.cnbc.com/id/19608137/for/cnbc/

It's good, but you gotta know that the system they send you back is refurbished.

Obviously this is better than not having coverage at all after 1 year (previous policy).

Double edged sword really: first it costs them money, but they reassure owners of the 360.

On the other hand this sends a signal to everyone else who was going to buy a 360 that the failure rates are definitely massive if they are going to all this trouble to cover it.

I'm impressed. Good for Microsoft and good for 360 owners.

Wasn't it like 30 (or was it 90) days before the one year hike?

This still doesn't solve the underlying problem but considering they're doing this they also have to be getting serious about a redesign of the system to stamp out the problem completely.

I expect this to kill any chance of a 360 price cut this year...