Lately, there's been a lot of online speculation about the future of Microsoft's Xbox gaming division. The company laid off 1,900 team members from its various gaming groups a few weeks ago, just shortly after it acquired Activision Blizzard. Then rumors hit the interweb claiming Microsoft is going to release big first-party titles like Starfield, Gears of War, and even Halo games for other consoles, specifically for Sony's PlayStation 5.
Many Xbox gamers have posted messages they no longer support Microsoft's gaming efforts because of the rumors that its first-party games may be heading to other consoles. In response, Microsoft Gaming CEO Phil Spencer stated on his X (formerly Twitter) account that sometime in the next week, users should learn some more information "about our vision for the future of Xbox."
This does feel like a new and major turning point for Microsoft's gaming efforts that didn't seem to be in the cards until just recently. However, with all the gloom and doom speculation about the future of Xbox, it's perhaps important to point out that the division has suffered through much worse times.
Indeed, it's hard to believe that the Xbox business survived through the early years of the release of the Xbox 360 console. It launched in the US on November 22, 2005, and, as expected, it was a fast seller out of the gate.
However, there were reports even in the first few days of the console's launch that people were encountering some issues with the Xbox 360. Our own forums had people reporting about games crashing on their console and even overheating hardware. Over the next year, more and more online posts from early Xbox 360 owners claimed that their consoles were encountering what became known as the "Red Ring of Death."
It refers to the original Xbox 360's power button that had four lights surrounding it. They were all supposed to be green to indicate a working console, but many owners later saw three red rings, which meant a complete hardware failure. Some console owners reported they had gone through as many as three Xbox 360 consoles before they got one that worked. In September 2006, Microsoft announced that people who bought the console before January 1, 2006, would be able to get one year of free repairs, even if the original warranty had expired.
In February 2007, the BBC's Watchdog investigative show ran a story about the growing number of Xbox 360 failure reports. In response, Microsoft sent a statement to Gamesindustry.biz, stating that it had encountered "a few isolated reports of consoles not working as expected." However, it claimed that the number of hardware failures for the console was "significantly lower" than the 3 to 5 percent amount that was the norm at the time for consumer electronics products.
However, the hardware failures indicated by the Red Ring of Death continued to start showing up on more Xbox 360 consoles. In April 2007, Microsoft announced it would expand the warranty for the console from 90 days to one year. It would also offer free shipping for any console that needed to be repaired.
Even with that warranty change, it didn't seem to be enough as the hardware failure reports continued to come through. In early July 2007, one report surveyed a lot of retailers who sold Xbox 360 consoles and asked how many extended warranties they sold to people with defective consoles. The survey results hinted strongly that Xbox 360 failure rates were well beyond the normal 3 to 5 percent numbers.
Just a few days later, on July 5, 2007, Microsoft's Xbox leader at the time, Peter Moore, posted a message on the Xbox website. While he continued to claim that "the majority of customers who own Xbox 360 consoles have had a terrific experience from their first day", Moore also admitted that Microsoft had "identified several factors that can cause a general hardware failure" and had " made certain improvements to the console."
Moore then announced that all previously sold and current Xbox 360 consoles would be covered by a new three-year warranty specifically covering the hardware issues indicated by Red Ring of Death. He wrote:
If a customer has an issue indicated by the three flashing red lights, Microsoft will repair the console free of charge -- including shipping -- for three years from the console’s purchase date. We will also retroactively reimburse any of you who paid for repairs related to problems indicated by this error message in the past. In doing so, Microsoft stands behind its products and takes responsibility to ensure that every Xbox 360 console owner continues to have a fantastic gaming experience.
In a 2020 interview with Edge magazine, Moore said that it cost Microsoft $1.15 billion to fix the Red Ring of Death failures with this extended warranty. That might have bankrupted most companies, but Steve Ballmer, Microsoft's then-CEO, signed off on the plan. The final result was that the Xbox business in general, and the Xbox 360 console in particular, got through this very rough time.
In 2021, Microsoft released a multi-part documentary on the history of the Xbox on YouTube, and one of the six chapters discussed the Xbox 360 Red Ring of Death. The documentary offered a more specific explanation for the original Xbox 360's hardware problems. In short, the console got very hot and then cooled off very fast when it was turned off. That caused internal components in the console to get overstressed and finally break.
Even today, Microsoft still has not revealed how many of those original Xbox 360 consoles were replaced due to the Red Ring of Death. It remains perhaps the darkest chapter of Microsoft's gaming history.
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