Response to rate of failure
In the early months after the console's launch, Microsoft stated that the Xbox 360's failure rate was within the consumer electronics industry's typical 3% to 5%.[6][7][8][9] Nevertheless, Microsoft has not released their official statistics on the failure rate of the various versions of the console; the company's press relations policy is to focus on the prompt resolution of any technical problems.[10]
On July 5, 2007, the Vice-President of Microsoft's Interactive Entertainment Business division published an open letter recognizing the console's problems, as well as announcing a three-year warranty extension for every Xbox 360 console that experiences the "general hardware failure" indicated by three flashing red LEDs on the console.[11]
A source that has been identified as a team leader and key architect in the creation of the Xbox and Xbox 360 and a founding member of the Xbox team[12][13] provided insight as to the high rate of failures. The interviews suggest that Xbox 360 units that fail early in their life do so because of problems in the system design, parts supply, material reliability, and manufacturing issues as well as a system not tolerant to faults. These issues were alleged to be the end results of the decisions of management in Microsoft's Xbox team and inadequate testing resources prior to the console's release. A second source cited that, at one time, there was just a 32% yield of one of the test production runs. 68 of every 100 test units were found to be defective.[14][15]
In February 2008, during the Game Developers Conference 2008, Microsoft announced that the "Failure rate has officially dropped", but without mentioning any specifics[16]. The same month an examination of 1040 Xbox 360s by SquareTrade found a 16.4% (one in six) failure rate; 171 were "disabled", of these 171 units 60% failed due to a general hardware failure (and thus fell under the 3 year extended warranty) of the remaining 40%, not covered by the extended warranty, 18% were disc read errors, 13% were video card failures, 13% were hard drive freezes, 10% were power issues and 7% were disc tray malfunctions.[17][18]. However SquareTrade also admits that their estimates are likely much lower than reality due to the time span of the sample (six to ten months) and the eventual failure of many consoles that did not fail within this time span.
On October 17, 2008 a class action lawsuit was filed in California against Microsoft over the RROD problem. [4]