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Monday, September 15, 2008

The X-Box 360 Red Ring of Death: A David and Goliath Story
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Dean Takahashi wrote an exposé on the "red ring of death" problem exhibited by a large number of Microsoft's X-Box 360 game consoles. The problem was so big, Microsoft implemented a free replacement program which will cost up to $1.15 billion dollars.

Takahashi suggests the lesson to be learned is this:

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.
Amazon and eBay have their periodic outages. Sony had its problems with batteries, Intel had flawed Pentium chips that were bad at math, Nvidia took a $200 million charge to deal with graphics failures on laptops, and Apple has had its share of glitches on the iPhone. As electronics become and more complicated, it becomes a practical impossibility to test for every single flaw. But with the force of the Internet behind them, angry customers can exact a revenge that can be extremely damaging to a company's brand image.
(emphasis added)

This just shows how the market can correct itself, even when the conflict is between mere end-users and one of the biggest market players.

posted by Adam Marcus @ 1:27 PM | Antitrust & Competition Policy , Capitalism , Economics

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