But there is no doubt that the company has lost considerable good will among gamers. Microsoft has still sold more Xbox 360 consoles than Sony to date. Microsoft’s top game executive, Robbie Bach, president of the Entertainment & Devices group, said at a dinner in July that Microsoft’s own research shows that gamers have largely forgiven the company for defective Xbox 360s. The future profits that the company once hoped for are now likely to wind up in Nintendo’s pockets. It has lowered its ambitions, hoping instead just to get a clear edge on third-placed Sony. That has stopped the company from reaching the broader market of consumers that Nintendo has won over. But prices ought to be lower still during this stage of the console life cycle). And the company believes it will sell more boxes than Sony will. ( Microsoft disputes this point it cut the price of all three versions of its Xbox consoles by $50 to $79 on Wednesday. The quality problem negated much of the advantage of going first, and it has delayed the company’s plan to aggressively market the console and slash its prices. “They got enamored with the idea of the Microsoft army rolling everything out at the same time,” said one knowledgeable source who asked not to be identified. What Microsoft’s leaders didn’t realize was that getting to market first with a flawed machine would only win them a battle and it risked the loss of the war. It couldn’t afford to stop and delay the launch in order to solve its quality problems, or so upper management believed. Likewise, Microsoft’s strategy depended on beating its rivals to market. Once the Russians and French mobilized, the Germans had to move into action. The Schlieffen plan called for them to strike first. It reminds me of the German war machine just before World War I, as chronicled by Barbara Tuchman in the classic history book, “The Guns of August.” The German generals were intent on keeping their trains on time but the leaders overlooked their chances for stopping the war altogether. The different parts of the business weren’t aligned.
There were plenty of warning signs, but the company chose to ignore them. Even though Microsoft’s leaders knew their quality wasn’t top notch, they did not ensure that resources were in place to handle returns and quickly debug bad consoles. With each new machine, the company figured it would ride the “learning curve,” or continuously improve its production. Microsoft knew it had flawed machines, but it did not delay its launch because it believed the quality problems would subside over time. The Xbox 360’s defect problem will go down as one of the worst snafus in consumer electronics history. Even so, Microsoft could have captured more gamers during this product generation, yet the RROD problem held it back. Rival game console maker Nintendo out-thought the larger players Microsoft and Sony by designing the Wii game console with a clever, intuitive game controller.
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This is the unauthorized tale of how Microsoft lost its chance to become the leader in the biggest market it has attacked beyond its twin monopolies in Office and Windows software. Szarek, who became a spokesman for dispossessed defective Xbox 360 owners, played a part in making Microsoft acknowledge its console quality problem.
#Xbox 360 s video for free#
Microsoft replaced these machines for free under the warranty that it announced on July 5, 2007, for defective Xbox 360s exhibiting what it more politely called the “three flashing red lights.” That warranty program cost Microsoft up to $1.15 billion, but the loss of face and loyalty among gamers in the fierce console war with Nintendo and Sony has been immeasurable. Szarek’s fourth machine lasted almost two years, experiencing the same short life that many other Xbox 360s suffered. There were at least a million or two other people like him. But by the spring of 2008, Szarek was vindicated. When he complained on the Internet and to the media about the shoddy product and poor customer service, people branded him a cry baby and wrote him off as a statistical anomaly. Each time he got a refurbished console as a replacement (a machine that had been returned to a repair center in Texas, fixed as much as possible, and then shipped back out).
But each time one of his Xbox 360 consoles failed, he had to spend time convincing Microsoft’s tech support that they should send him a new console. A 40-year-old photographer, Szarek was a hardcore Microsoft fan who spent more than $1,000 on his games.
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