While many of us will remember the Xbox 360 as the console that cemented Microsoft’s reputation, others will recall the Red Ring of Death or RROD that plagued nearly 25% of the consoles. In a recent IGN podcast, past Xbox head Peter Moore revealed that the total cost to Microsoft to fix the issue cost $1.15 Billion USD at the time. It’s key to note that at the time, the Xbox division was still in the red despite its success so far against the PS3.
Internally, Microsoft knew that something was off when it started hearing back from customer service and receiving the defective units. As we now know, the issue was heated related and due to the new lead-free solder. As the engineers and Xbox team worked on the issue, it became apparent that to fix and replace all the defective units, it would cost about $1.15 billion. Moore went to the then CEO Steve Ballmer with a plan to ship with Fed Ex and quickly replace the units. In his words, this is how it went:
“Steve said, ‘okay, talk me through this.’ I said, ‘if we don’t do this, this brand is dead. Steve looked at me and said, ‘what have we got to do?’ I said, ‘we’ve got to take them all back, and we’ve got to do this in a first-class way,’ because when you take a console away from a gamer, and you’re going to spend three weeks fixing it… so we’ve got to FedEx this all the way. We’ve got to FedEx this all the way. We’ve got to overnight it back in two.”
Upon hearing the billion price tag though, Steve Ballmer didn’t flinch. In Moore’s words, there was no hesitation. Microsoft needed to act fast and decisively to save the Xbox brand name and ultimately, we got the Xbox One, which might not have happened if the Xbox 360 had tanked with the RROD. Given how the Xbox brand is today, gamers really do appreciate firms that can provide good customer service and address issues head on. It’s important to note though that Microsoft still took a while to address the RROD.
Thank you IGN for providing us with this information