New study has Xbox 360 failure rate at 16%

by Daniel Nasserian - Feb 22 2008, 10:00

A new independent study by warranty seller SquareTrade has shown that out of over 1,000 units, the Xbox 360 projects a 16.4% failure rate with numbers expected to climb.

SquareTrade has noted that around 60% of the failed units have suffered from the infamous Red Ring of Death, which causes the system to be unplayable. This issue has been addressed by Microsoft and forced them to extend the warranty from 1 year to 3 years (a move that cost the company over $1 billion) as it is due to a manufacture defect. 

"It is reasonable to believe these failure rates will increase over time, since the Xbox 360 failure issues tend to increase with prolonged use where overheating appears the main culprit," SquareTrade CEO, Steve Abernethy, said in an interview with 1UP.

Though 16.4% is significantly lower that the 33% failure rate that a major retailers quoted on last year, it is also higher than the number of failed units that Microsoft claims.

In defense, Microsoft released a statement saying, "We have not seen the report, and are unfamiliar with the agency that filed it. Based on the enthusiast community's feedback yesterday, the methodology of this report is suspect."

SquareTrade describes itself as "the largest independent warranty provider" and got its start in online merchant verification in 1999 working with retailers like eBay.

Current reports show the Xbox 360's competitors, Ninendo's Wii and Sony's PlayStation 3, to have about a 3% failure rate. Consumer reports show that the failure rate of the Xbox 360 is higher than most consumer electronics.

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