The infamous Xbox 360 "red ring of death" (indicating a failed unit) has caused Microsoft - and its customers - untold pain in the three years since the console's launch in 2005, and cost it $1.15bn (£738m) last year. Microsoft has never said publicly why the console was plagued with faults: it seems that poor production quality was at the heart of the failures - an all-round problem with no single cause except impatience on the company's part as it tried to become the leader in videogame consoles.
It was an ambitious attack. Microsoft's engineers started working on the Xbox 360 at least a year after Sony's engineers began work on the PlayStation 3, yet wound up shipping a year earlier. With the first Xbox, the company lost $3.7bn (£2.3bn) over four years, mostly because costs of the box - particularly its hard drive - were too high. Bill Gates didn't really care about the losses; that was simply the ante for getting into an exciting new business. But Steve Ballmer, who took over from Gates as chief executive during the first generation, really wanted the Xbox business to be profitable second time around.