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Xbox 360 Defects: An Inside History of Microsoft’s Console Woes

Dean Takahashi, formerly of the San Jose Mercury News, recently published a fairly lengthy article at  VentureBeat.com that goes into the history of the 360’s development and why Microsoft ended up with egg on its face as a result. Even if you’re not that interested in the business behind video games, it’s a good read.

Most of the information in the article has been filtered out over the past few years but it’s interesting to read it in a concise timeline format.

“Fundamentally, [Microsoft’s] thinking shows that they are a software company at heart,” said one veteran manufacturing executive. “They put something out and figure they can fix it with the next patch or come up with a bug fix.”

This seems to be a common problem these days with all companies. In a rush to beat their competition to market they put out a product that maybe isn’t 100%, figuring they can deal with it later in the channel. People blame the companies for this, but is it really their fault? What about the consumers who continually demand that things be released before they are ready?

The yield problem was only discussed internally, and so the public at large was left wondering whether Microsoft was intentionally creating a shortage of consoles by making just a small number of machines. The truth was that Microsoft had to produce a lot of units — many of which failed — to get working consoles that it could ship. It was trying to get as many machines to the market as it could.

This was an interesting comment. While the public assumed it was a plan to keep prices and demand high, in reality it was a company scrambling to figure out what was wrong and stem the bloodletting.

“A significant factor that determines rate of return is how complex a product is to build,” Souri said.

The Xbox 360 was in fact more difficult to build than anything the team had built before. It had 1,700 parts, many of them hard to make. There were more than 200 suppliers.

Is it any wonder the system had problems? With that many organizations involved in creating so many interdependent components it is almost impossible to maintain any level of quality control.

To conclude, the video game industry has never seen a consumer problem as bad as the “red rings of death” and the size of the $1.15 billion charge stands as one of the biggest liability glitches in consumer electronics history. How Microsoft handled the flaw may provide a lesson for all modern electronics companies; that is, if you are going to promote the hell out of something, it better work the way you say it does and you better have a strong customer support and engineering debugging team to back it up.

Has any industry seen a customer relations problem as bad as RRoD? Maybe the Ford Pinto, ’cause it sometimes actually exploded… With any luck the lesson that was learned was “stop rushing things to market before they are actually ready.”

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