Andrew Clark in Chicago
Friday July 6, 2007
Microsoft is paying out more than $1bn (£497m) to repair chronic problems with its Xbox 360 games consoles, which break down in a fault known as the "red ring of death". The Seattle-based company said last night it had been forced to make an "unacceptable number of repairs" to the machines, which went on sale in 2005.
The fault triggers three flashing red lights on the console, indicating a general hardware failure. On internet messageboards, the problem has been dubbed the "red ring of death", or "bricking", because the machine becomes no more useful than a brick. Microsoft has decided to extend warranties free of charge to cover a period running for three years from the date of purchase, following widespread complaints. The company will reimburse anyone who has paid for repairs to date.
Microsoft said the clean-up would involve a charge of between $1.05bn and $1.15bn to its earnings for the financial quarter which ended in June.
Robbie Bach, president of Microsoft's entertainment and devices division, offered "sincere apologies" for the problem. The company has not revealed the number of failures, but such was the volume of repairs that one British firm, Micromart, recently announced it would not take any more Xboxes, saying it was getting a "phenomenal amount" of machines coming in with the same issue.
The write-off is a big blow to Microsoft's efforts to diversify from its traditional strength in software with products such as games consoles and a music player, the Zune, a competitor to Apple's iPod.
A productive way of exploiting Design Space is to drive a risk-mitigation project plan out of it. Consider the Design Factors on the 8 sides that can contribute to or detract from a successful outcome. We can list "Must-haves" on each side, followed by "Nice-to-haves". We can also go round each side asking "what can go wrong?".
The classic risk worksheet:
By creating one of these worksheets with a cross-functional team with knowledgeable people for each factor ( and one or two "renegades" to challenge orthodoxy) we can rapidly raise AWARENESS of triggers that can lead to risk; by being REALISTIC about the risks with evidence of similar events and consequences we can build PRIORITIES and discuss likely ACTIONS and assign ACCOUNTABILITY to see that they get done.
If we take each risk and assign a value representing Low(1), Medium(2) or High(3) to the impact and likelihood of the risk, we can plot them on a matrix and assign the priority to addressing each one. Each square represents the result of multiplying the Impact score by the likelihood score to get a maximum score of 9, (=3*3).
The matrix shown has likelihod as horizontal axis; the high impact-low likelihood square in top left is a "political minefield". Floods don't happen often but if you are not prepared for them the can attract huge media scorn!
We can then drive a Gannt chart for managing these risks as part of the normal project activity, because if we regard most risks as a lack of information to aid knowledgeable decisions they are tasks on the critical path if their impact means they need to be addressed.
We can then manage risks like the "Red Ring of Death" in a rational way, and avoid denial that things might occur and therefore not treat them as seriously as they merit. As someone once said "we can pay now, or we can pay later but we will pay." ....To the tune of more than $1bn (£497m) plus cost of the damage to the brand and competitive advantage to the competition.. all of which are factors in Design Space...Design 4 Consumer, Manufacture, Competitiveness and Sustainability.
[update on 12/7/07: Item from Guardian online: Where the Xbox 360 went wrong
Whoops, there is a problem with the console failing in significant numbers after all, said a reluctant Microsoft this week. So what is the cause? Charles Arthur investigates]