It's pretty much a universally known fact now that the Xbox 360 has a fairly high failure rate, but who would have thought that Microsoft not only knew that would be the case prior to launch and, more bizarrely, did nothing to rectify the specific issues causing the (insanely high) failure rate. Well, if Microsoft insiders are to be believed (and we have no reason to doubt them) that is exactly what went on over at Redmond - although there is a good reason.
In a nutshell, Microsoft decided that gaining a year's head start over Sony in the race to get the company's respective consoles on the market would more than make up for the replacement of a few dodgy consoles. Speaking to gaming site 8Bit Joystick, the source suggested that of all the original run of consoles, based on the 90nm CPU and GPU, around 30 per cent had already failed and all of them are likely to die early.
More tellingly, the source also suggests that predicting when and how a 360 is likely to fail is completely impossible because of the nature of the problems. The cause is always the same, overheating, but the result is almost universally bad solder connections giving way which leads to the infamous Red Ring of Death - the console's identifier for a critical component failure.
Going back to the reasoning behind the decision not to fix the QA, as strange as it might sound, it does look like Microsoft made the right decision. A year's head start with a console that has a better lineup of games and a lower price has clearly paid off. Seeing as consoles are sold at a loss anyway, with the profit being generated from software (read: games) sales, adding a couple of hundred million dollars in replacement consoles to the deficit, when it leads to a couple of billion dollars worth of sales in an uncontested market seems like a pretty good deal.
With the latest iteration of the console packing a new 65nm CPU and redesigned GPU heat sink, failure rates are expected to be considerably lower, and the GPU is also scheduled to see a die shrink later this year, which again should help matters. All in all, the insider information doesn't tell us much that wasn't already speculated, but having some confirmation from the source is always good.