A survey of retailers has suggested that XBox 360 hardware problems (all problems, not just the 3 red lights problem) affect approximately 1 in 3 XBoxes sold. How does this compare with other gaming systems? A former EB Games store manager, Mathew Girard, says...

"Failure rates for all other consoles were not high enough for EB to consider revising their policies. Most other console systems have a failure rate of less than one percent, including the PlayStation 3."

Another EB Games manager, who asked not to be identified, was asked if the store warranty was "worth the price". For the XBox he said "yes, absolutely". For its competitors, including PS3 and Wii "probably not". So what are the return rates for the PS3 and Wii? This manager's store location has sold hundreds of XBox 360's, PS3's and Wii's. Amazingly, not a single Nintendo Wii has come back defective. Only a handful of PS3's have come back. And what about the XBox 360? At one time, close to 30% of XBox 360's were coming back, mainly with the 3 red lights problem. That rate has since dropped way down as Microsoft has addressed the problem.

A Best Buy store manager, who also wished not to be identified, verified the XBox 360 failure rate as being in the 25% - 30% range early on.

However, even with its "Red Ring of Death" problems, the XBox 360 is still the most successful game console worldwide. Why? Quality of games available, support from the game software industry, Microsofts market power, XBox Live, and the overall performance of the 360. There's no doubt that Microsoft is in the game business for the long haul. Video games have always been on the cutting edge of both hardware and software development. Video games have driven huge advances in graphics technology. A lot of the special effects that you see on TV and coming from Hollywood are directly related to innovations that originated in the video game industry. It's a natural fit for Microsoft and a connection they really can't afford to give up, with Google and other companies chipping away at their domination of the computer desktop.

With all that said, Microsoft still claims that the overall XBox 360 failure rate is within three to five percent of total units sold. This, they claim, is well within the industry standards. However, this claim simply isn't backed up with what the people who should know best are saying. At this point, however, it really isn't important anymore what the failure rate is. The XBoxes being sold today are much better in quality than those sold 2-3 years ago, so the recent reliability is probably in the 3-5% range that Microsoft claims. One just kind of wishes that Microsoft would stop "playing games" with their game. The fact that they increased the length of the warranty from 90 days to 1 year kind of says it all.

Based on a poll of retailers nationwide, conducted by DailyTech, the Xbox 360 was unanimously voted the least reliable gaming console on the market. The high failure rate of the X360 has even forced retailers, most of whom sell extended warranties on their electronics, to revise pricing on their XBox 360 warranty. Extended warranties have always been a huge profit center for manufacturers. The profit margins are typically 80% or more. For the XBox 360, EB Games was actually LOSING money on their extended warranty sales. Unheard of. So they doubled the price of their one year warranty. That speaks volumes.

"We had 35 XBox 360's on-hand when the console was first launched. I know more than half of them broke within the first six months. Two of them were dead on arrival." - said former EB Games employee Matthew Girard.