Microsoft: We Have “Learned From” Xbox 360 Mistakes

Today sees the new, redesigned Xbox 360 console launch in Australia. We asked Xbox Australia chief David McLean to explain Microsoft’s approach to the new console.

[basicsameh514]

well looks like they fixed most of the issues from the older models except the cd scratching problem..but we can finally say Microsoft did good this time

[blitz0623]

Well what else were they supposed to say, that they didn't learn?

[Anon1974]

I mean, you have to wonder what the ongoing cost of RROD is. By taking that billion dollar hit they cleverly kept the cost of RROD out of the public eye. It's like saying "Hey, I lost $1000 today," and then the next day saying "Hey! I made $10! Good for me!" This type of accounting trick is good for keeping the real costs of things under wraps. And it obviously works. Plenty of people claim that Microsoft's EDD division is profitable, and has been for some time, but what they did is no different than me losing 1 million today and then claiming I'm doing well because I make 70,000 the next year.

So you have to wonder, is the 1 billion spent? Are they still chipping away at that 1 billion with RROD, or have they burned through that billion and the cost of RROD is being reflected on their financial statements?

At this point, we really have no idea if the 360's even profitable as Microsoft won't tell us what the 360 brings in, what software brings in, how much it costs to make and ship 360's or what the ongoing costs of the 3 year warranty come to. All we know is 360 sales have been in decline for 5 consecutive quarters, 360 software sales are also in decline and 3rd party development is in decline. Microsoft claims EDD profits are up because of "non-gaming" reasons - but they'll never give the public a look at what's really going on with the 360. My guess is that Microsoft's shareholders wouldn't like what they see.

[HolyOrangeCows]

I think they learned that they can get away with anything. Broken consoles, online fees, etc...

[Bathyj]

darkride66

1-1.5 Billion is just the figure they gave when they first announced the 3 year warranty. Peter Moore was still working for M$ back then.

I dare say they thought RRoD would be cleared up much sooner than it was. No one could have guessed it would still be an issue 4 or 5 years into the consoles lifecycle.

Who really know what they've spent, but just to put into perspective 10M consoles at $200 each is $2B. It wouldnt surprise me if they went way over that billion, but we'll never know.

[trancefreak]

I wouldn't call scratching the media we put into our console is a they did good here. The little slot dvd is where we put are hard earned money into. I don't want it scratched.

[iceman2929]

If im not mistaken, when they said that the xbox was profitable, they meant that all costs incurred due to R&D, Manufacturing and RROD/E74 have been recuperated and sales are now generating profit.

Im no expert accountant (hell i only took my first accounting class last year...) but any RROD that happen in the present year should be counted as current operating expenses. So they put aside the one time liability to cover most costs for the first three years and any subsequent costs would only take a bite out of current year revenues.

[Anon1974]

After working in the brokerage industry for over a decade before my return to school to be a game programmer, I've poured through hundreds, if not thousands of financial updates. Microsoft keeps their 360 info pretty close, and to my knowledge have never claimed that the 360 is profitable unlike Sony who last year confirmed that the PS3 has been profitable as a platform for some time.

When a company claims they're profitable it in no way indicates that R&D expenses have been recouped or that past losses have been made up in any way. Indeed, just looking at Microsoft's EDD division they haven't yet come close to recouping their reported losses since the 360 launched with the profits they're currently reporting. On top of that, current profits made by the entire division seem to be unrelated to the 360 at all. Microsoft, while not reporting actual numbers, goes out of their way in the updates filed with the SEC that the profit in the EDD division is due to increases in "non-gaming revenue". As I pointed out in my earlier post, Microsoft has shown multiple back to back quarters of year on year declines in 360 sales, they're reporting decreased 360 hardware revenue and falling 360 sales revenue.

We really don't know what's going on behind the scenes because Microsoft doesn't release the specifics, however by setting up the 1 billion fund for warranty repairs, this would effectively keep RROD off the EDD books until the money runs out. If that billion is gone, then you're absolutely right, the cost of warranty replacements should be reflected in the EDD financial releases we see quarterly even if we can't see the amounts.

That was my point. We simply don't know what's going on. Investors often have short memories. I'm guessing not many look at the EDD's financial updates and say "Sure they're making 100 million now, but didn't they just have to write off 1 billion a couple of years ago for something? What happened with that?"

I guess my history in the brokerage industry just compels me to naturally ask those kind of questions when I'm considering investments for my portfolios. I may be training as a game programmer now, but I just can't turn it off after decade of scrutinizing financial reports. These are the type of questions I ask.

[ViciousBoston]

Thats not true, the red ring problem is still as pravalent as ever. It just stops it from happening AS frequently. They didn't stop anything.

[basicsameh514]

@ViciousBoston
oh relly bring me real proof not just 3 videos

[T9X69]

When was the last time you seen reports of hundreds of Xbox owners bitching about RROD? It happens now as much as the YLOD on PS3, which isn't very often. I use to get messages on Xbox all the time about RROD, now I havn't seen one in months.

[thehitman]

You dont get much reports because its a common thing now and people dont really care anymore because its a known issue and not as big of a deal to many. My friend who bought his 360 early last year had his RROD late last year around xmas time which sucked and he ended up getting a ps3 for the holiday until he got his 360 repaired so its still a big issue. If MS fixed the problem with the new models which I bet every1 hopes they did is sort of irrelevant at this point considering there are 40mil 360s out there all RROD prone.

[blitz0623]

Because getting RROD isn't news to anyone anymore

[ReBurn]

Prevalence is the number of total occurrences in a population at any given time. Incidence is the number of new occurrences in a population over a given time period.

In the case of the 360 S I would imagine that the prevalence is really low considering there aren't many confirmed incidences and it has only been available for a couple of weeks. So ViciousBoston's assertion that the the RROD problem is a prevalent is ever is likely patently false in the context of the 360 S.

In the case of the original 360 the prevalence of RROD is relative, but over time the incidence rate will most likely rapidly taper off since that model isn't being produced any more. But in this context ViciousBoston's assertion is more credible, but not necessarily true since the timeframe wasn't well defined.

Statistical analysis is fun. Everyone should try it!

[trancefreak]

funny 1 xbox lover wants link and proof while the either says ylod is a known fact without question.

I have never had a yellow light issue. Ever!

Now the 360 I totally gave up on it until i bought my jasper unit which is the best version Ive ever owned.

I do have a problem now with my launch ps3 60gb. It will freeze up in about 10min even idling. fan works no ylod yet so i might trade it into gamestop for that promotion for a slim. well see.

[AAACE5]

Hopefully this works out, but here on N4G, the bashing is about to begin!

Dim the lights please!

[Mr Marbles]

love the thing, its so dam sexy, and it is solid as a rock. I now own three 360s, and each one I've purchased I love more than the last.

My PS3 slim feels like a cheap paper plate next to my new "360 250"

[karl]

can say that they learned from their mistakes by looking at kinect...

they have even go worst with all this fake videos...

[Foliage]

Too bad xbox fans haven't learned from their mistakes.

[blue7xx7]

Well of course they have when a problem (RROD) cost you over 1 billion to fix for free of course you are going to learn from it and not repeat the same mistake again. So I doubt the next Xbox will have such high failure rate as the Xbox 360.

But at least they are trying to fix the newer models and decrease the failure rate.

[theonlylolking]

I dont trust M$.

[cpt_kaos]

I'll be sitting on the fence for 6 months and see what happens before I purchase this one.

[1Victor]

I recommend a year since that is their warranty expiration date.Nothing personal but I don't trust MS as much as I did before.

[cpt_kaos]

Yeah mate I don't trust Microsoft much either more so not because of the 4 dud's I had but the crap service from there so called service center when trying to explain the situation to someone who barely understood english.

[swice]

Smart move. Victor said one year, which is smarter, but it's always smart to wait. Same thing with brand new car models: wait for a year so they can fix the bugs!

[ForeAllEternity]

Not gonna take their word for it since PR doesn't handle QA

[Godmars290]

MS's PR people can always tryout as stand-up comedians...

Really hard to accept that when there were reports of units dieing within a few days of launch. Couldn't even be bothered to redesign it to keep it from eating discs, even if it was some idiot's fault for moving it.

[LordMarius]

The only way to really see if the have learned is to wait for next-gen and see if they rush their next Xbox just to be first on the market

[SKUD]

They will. Make no mistake about it. lol.

[jjesso1993]

RROD is not only mistake charging £89.99 for 120gb HDD £60 for wireless adapter and charging for online play they seem like massive mistakes to me.

[AAACE5]

Short term memory huh?

You might have forgot Sony charged $40 for 8 mb memory cards, $100 for a HDD and about $60 for a modem for the Ps2!

All companies make mistakes. I think it has something to do with their second console! Several companies have had issues with their second console. I would mention one in particular, but people have been sucking so much ...., they wouldn't believe it anyway!

[Newtype]

That's a dumb assumption though, PS2 was in the generation of Xbox. Microsoft should have learned off of Sony's mistake.

[jjesso1993]

I did not know that my ps2 came with memory card and hdd really was not needed.

[cpt_kaos]

Well HDD which was a choice and not needed and the PS2 Ethernet Network Adapter was only needed on the FAT PS2 as it was built into the slim PS2 systems.

[AAACE5]

@Newtype... Dumb assumption huh? Sony was able to do it so MS figured it would be ok as well!

@jjesso1993... The HDD isn't really needed for the 360, because a lot of gamers will never play online or get an XBL account. They just need a place for their save files! I have tried to get people to take advantage of all their consoles have to offer, by getting them online... But I guess they feel that would be the final step towards them becoming a electronics geek or they are scared to get their *ss kicked! Either way, they just don't seem too interested in online gaming!

@cpt_kaos... I know the Ps2 slim had the modem built in! Don't ge me wrong, i'm a gamer and I loved the Ps2! I played at least 40% of the 1000+ games. Pretty much the same thing I told jjesso. The arcade was mainly meant for the people who didn't want to get as involved as we are in gaming. So the HDD is optional, and the ethernet port is there if you want to use it!

Basically what i'm saying is the 360 is balancing between last gen and this gen. It is trying to ease people into moving up to the newer consoles. Because truthfully, some find it hard to pay high prices for games stuff, especially when they don't respect it as new tech!

Before anyone throws their bash and say the 360 is not new tech, it's old tech. I am speaking about videogames as a whole and the lack of respect these consoles get because of the reputation that goes along with the title..."VIDEOGAMES" . With that title, I don't care if a console cost $1000, people will still view it as a toy!

I still believe the Ps3 is a technological masterpiece! But that didn't stop a dude I knew a few years ago from leaving his $500 console on the rug sucking up dust and kicking it by mistake and sitting sh*t on top of it like a f*ck*n coffee table! And before someone tries to get mad, I know people who treat the 360 the same way!

People just don't respect this sh*t like we do! To some it's more of a novelty.

[1Victor]

"PS1 and PS2 sucked hard for quality build."can you tell me were you got your stuff from better yet was you alive when the PS was release.don't try to compare Sony PS2 disk reading problems to the ones MS is having with the RROD Sony fixed to within the allowed 5% and the problem died within a year and a half of been outed Microsoft in the other hand denied the problem for 2 years and when they got wind of consumer service launching a investigation they came clean and gave a 3 years warranty and refunded all the repair money because it would be worse for them if consumer services would taken MS to court and force them into a recall of all xbox 360 witch would be a devastating blow to MS gaming division forcing them out of the gaming industry. Kids if you going to talk about history research before writing, Nintendo,Microsoft,Sega,Sony and all companies only care about one thing MONEY the more they can get out of your pocket the better for their fat investors bank account .

[jjesso1993]

AAACE5 you do realise how many devs are coming about the lack of HDD in all consoles from begging this simple move would change alot being able compress loads of stuff and install on 360 would helped lot of developers.

[Bellcross]

Of course they did, what company likes losing $1 billion or more a year?

[bym051d]

Learned from mistakes? Great. Where's my cheap hard drive expansion.

[Bathyj]

Its on PS3.

[bym051d]

And I use my PS3 to play PS3 games. Doesn't mean that I don't want more HD on my 360.

[Newtype]

It's not fixed...

[SilverSlug]

really?

[coojo]

glad this 360 came out now i have a 360 for all 5 rooms in my house :)

[Spenok]

Thats just sad.... 5 360's which cost at least $200, so either $1000 for ease of use. OR $1500 just so you dont have to move the machine....ridiculous.

[xg-ei8ht]

They have learnt.

They've learnt that even though you release broken hardware, most americans will rush out and buy it.
They've learnt that even if it breaks time and time again, alot of people will buy another one time and time again.

They've learnt that they can push any sh^t on you they like and you'll take it in the pipe 5by5.

They've also learnt that rushing out products does infact put you infront for a short amount of time.

I think they have learnt alot.

[PS360PCROCKS]

Admitting is the first step Microsoft.

[Spenok]

If they had fixed it this time. Why didnt they fix it the other 5 times they said they did? I have a feeling that if this is really an improvement its really not much of one at all. Maybe in the value department because it comes with a wireless adapter attatched (finally) but thats about it.

[Neko_Mega]

How many times they fix the problem? Now why would you trust this? They get paid to say good things about their system.

I already heard from some people the it overheated or it red dot on them.

Only one person had overheating problem.

[guerojose]

And can they keep a straight face?

“Yes, we’ve moved from a three year warranty to a one year warranty,” says McLean. “And that’s because we know we’ve built a product where a one year warranty will suffice."

RIIIGHT! Like all those car companies that have the best quality are always the ones to give you the shortest warranty period.

Hell, if they've got such incredible confidence in this new design, then why not bump the warranty down to 30 days, or just get rid of it, period?

Brilliant.

[JustTheFactsMr]

They initially claimed they only needed a 90-day warranty at launch because it was all based on proven technology (DVD, 5.1 lossy sound, component output. IOW last gen technology) and was very reliable. It sufficed. Joke's on you mr consumer. Ha Ha.

Now we know the truth why it was so short.

However they "claimed" the PS3 with all that new tech was a concern and therefore needed that extra 1-year warranty. These guys are like a comedy act.

They think people don't remember their falsehoods. Maybe if they hadn't been spreading so much FUD and built a better product they would actually be trustworthy now.

You only need component. You only need HDMI 1.2. We are within industry standards on failure rates. No game will be effected by a lack of HDD. PS3 has no games at launch (but shhh we had fewer). We give you the option of wi-fi unlike Sony (but shh now we are forcing it on you with the Short).

[ForeAllEternity]

The logic is hilarious. Thanks Dave! I needed a good laugh.

[chidori666]

"Microsoft: We Have “Learned From” Xbox 360 Mistakes"

NOPE.

http://www.youtube.com/watc...

lie of MS....

MS not fixed the problem of red brick of death in new sim 360.

[PSjesus]

That why we got a PS3.

[Bathyj]

“One, people are streaming more and more content so they need wireless that supports [the 802.11n wireless protocol] and to put that straight into the box.

“Two, people are downloading more and more content so they need a bigger hard drive and we’ve put a 250GB hard drive straight into the box.

“Three, the previous console was a little noisy for some of our customers so let’s make sure that this one is whisper quiet, and it is.

“And four, let’s not have any issues around breakdowns and so we’ve built it from the ground up to make sure that that doesn’t happen again.

Is it just me or does all that make it sound like a Playstation?

[Obama]

Technically the RROD doesn't exist anymore. It's now the infamous RDOD that 's plaguing the console.

[gcolley]

nothing to see here

[Mr Marbles]

half of you SOBs dont and won't ever own 360s, why the "eff" do you even care?

Why are you pathetic people so upset the new 360 is being sold? Do you finally realize it spells the end for PS3?

[jl5571]

No, you friggin' dolt.

Do you not effing understand that if MS can get away with chucking QA out the window, it will have potentially HORRENDOUS implications for the future of the industry??? Why should anyone bother making a solid piece of hardware that doesn't break if PEOPLE BUY IT ANYWAY???

Someone above mentioned that MS is likely to rush the next console just like the 360. I'll go farther than that. Why shouldn't Sony and Nintendo rush theirs to market, too? MS did it and still made a killing.

And you, my friend, are exactly the kind of idiot who will be first in line to get boned. Sheesh. The stupidity in this forum is frightening.

[Paradise Lost]

Sure they fixed the 3 red rings.
Now a new red dot of death will appear out of the blue.

[sam2236]

But LIVE still isn't free...

[Mr Marbles]

LMAO @ PSN+ what a joke.

[Snakefist30]

But The Free Online Is IDIOT!!!!

[sam2236]

@Mr Marbles: PSN+ may be a joke, but at least I don't have to pay €50 a year just so I can play online, download demos and have ads everywhere. DURRRR

[gumgum99]

You know what they say Microsoft... http://www.youtube.com/watc...

^_^

[konspiracy187]

I find this healthy for the competition. Microsoft knew they needed to step up with something more to combat the PS3 fever. I could care less about sales, but it'll be interesting to see how this plays out.

[dizzleK]

if this can get a few more years out of the 360 brand, more power to them. i don't hold a grudge against them.

i worked at gamestop for almost 3 years. i'm completely willing to accept that a large % of 360 failures were due to the users. some of the 360s they'd trade in were absolutely foul with dirt, dust, carpet fiber, pet hair, etc. i picked up a 360 a few weeks ago, original model, and the damn thing runs smoother & quieter than my ps3 slim.

[Sully_Moustache]

Yeah and learning from Sony too. Black Piano, wifi ... The next review could even set an internal power supply.

[jneul]

yeah you really learnt allright instead of fixing the problem you put in some code to makee the x360 shut down when it get's too hot, that won't take long...
RROD still exists except it had a new name now, welcome to RDOD....

[MorganX]

Picking up a 360S this weekend.

[Chaylon]

We should call this "War of the fanboys", stop this ridiculous posts already, this doesn't provides anything worthy to the gaming community at all.