Microsoft Takes Billion-Dollar Charge on “Red Ring”
Microsoft announced late last week that it will take a charge of over $1 billion for repairs and extended warranties, after months of reports about system errors nicknamed the “Red Ring of Death” by users.
According to a report in Forbes, the error is marked by “a circle of flashing LED lights around the power button that indicates a massive hardware failure”- a problem that has become more and more troublesome for Xbox 360 users in recent months. Microsoft will spend up to $1.15 billion, charged to its fourth quarter balance sheet this year, in order to enhance its warranties on the machines and pay for repairs. For those suffering from the “red ring,” Microsoft will now offer a three-year warranty, rather than the previous one-year policy.
The gaming Web site Joystiq.com last week put the XBox 360’s “Red Ring” rate at as high as 33 percent.