Good to see a big company owning up to its problems. Go Microsoft!

They don't have a choice, ckmlb. It's either wait until the entire 360 population collapses underneath them because they ignored the problem, or react before the civil lawsuits start pouring in. I'm guessing they will be modifying these refurb consoles, which is boosting the amount of money they lose. It would be foolish to just throw out another console that is made to break.

360 redesign in-process, plz.

I don't think Ck is saying they should have done differently now, just saying that poor design choices caused this in the first place.

If the system had a sub-3 percent failure rate to begin with, they wouldn't have had to do this at all.

This is an awesome move for the 360, and a painful one for Microsoft. Good for the system, hard for the parent company. It may cost MS a billion dollars, but I suspect this will have a very significant impact on system sales come this fall/winter. You can rest assured I will tell all customers who consider purchasing a 360 about this new warranty plan (I work in retail).

Good news for us. It only covers "three red light errors" though. I'm guessing they have confidence in the upcoming systems that are sporting the new hardware.

M$ money grubbing corporate pigs... Oh wait, they did something good didn't they? :P

To be fair though the other problems of the console (besides the three red flashing lights) are probably in line with the other consoles.  I mean when was the last time we heard of people sending one back because of a failed harddrive or dvd drive?

Wow, for Xbox360 owners (and future) this is very good since this is a full protection (3 years !)

But sincerely, Microsoft power make me mad !
Their work on console was bullshit (for the Xbox360) since they released an "unstable" system that break easly. And these guys just have to pay to protect them from a massive "hype damage". Which other company could pay 1 billion for reparing a such big hardware mistake.
Which company could survive from a 30% failure rate ?????????????????
It is as if they made a mistake and they don't pay for it !!
Ofc, there is the 1 billion$ but I m not sure this is enought for a so big company

Oh Bodhesatva,

Will say to your customers that Xbox360 break easly, that they have 30% failure rate ? and adding that, whatever, there is a 3 years garantee ?

Or will u just mention the 3 years guarantee ?

Yeah, they are taking a gamble.  They are hoping the relief it puts into gamers minds (I know that just seriously boosted my chances of buying one soon) will outweigh the losses caused by offering the deal.  If the 360 is dropped to 300 and the PS3 to 400 it's gonna be tough for me to decide which to get first now.  Probably the 360 for the better (currently) game library, but before it would have been the PS3 due to failure rates.

I was moreso referring to his double-edged sword comment, whereas I think it's actually a solid move to put consumer worries to rest, probably the best thing they could've done. Of course I'm not arguing that the poor design is the cause of this.

Even better if true but this is a quote from the page that OP Linked.

"As of today, all Xbox 360 consoles are covered by an enhanced warranty program to address specifically the general hardware failures indicated by the three flashing red lights on the console. This applies to new and previously-sold consoles. While we will still have a general one year console warranty (two years in some countries), we are announcing  today a three-year warranty that covers any console that displays a three flashing red lights error message. If a customer has an issue indicated by the three flashing red lights, Microsoft will repair the console free of charge—including shipping—for three years from the console’s purchase date."

To me that sounds like 3 years for the red lights only.

 EDIT - I didn't quote the entire quote. FIXED.