August 13, 2007
Xbox 360 Out of Order? For Loyalists, No Worries
By MATT RICHTEL
SAN FRANCISCO, Aug. 12— Imagine your blender breaking down twice. The vacuum cleaner giving up the ghost three times. The espresso maker repeatedly going kaput. Then imagine replacing the item with the same model over and over while keeping your brand loyalty and sanity.
Stephano Nevarez can. Since he first bought his $400 Microsoft Xbox 360 in 2006, it has failed three times. Each time, he sent the game machine back to the company and waited weeks for a repair or a replacement.
“There’s nothing in the house that breaks down as much,” said Stephano, a 15-year-old high school student from Salem, Ore.
Yet he remains a devotee of his 360 console, the more so because he wants to play Halo 3, the latest iteration of a violent space epic due in stores on Sept. 25; it is available only for that game machine.
The game, published by Microsoft, could redeem the company going into the holiday selling season. Untold numbers of 360 owners have watched their machines break down, and then, in many cases, watched the replacement consoles do the exact same thing because of a severe and widespread manufacturing flaw.
But if the Xbox players keep coming back because of Halo 3, and if other gamers buy the console just for the game, then Microsoft could markedly improve its standing in its battle against rivals Sony and Nintendo.
“Halo 3 is Microsoft’s most important game,” said Dan Hsu, editor in chief of Electronic Gaming Monthly, a magazine for enthusiasts. Mr. Hsu, who has seen the game, said it delivers in spades, with one caveat: “Assuming your machine does work, it does what it sets out to do.”
The bar is high. Combined, Halo and Halo 2 have sold around 15 million units, making the series one of the most successful game franchises of all time. The game has spawned novels, comic books and a possible movie.
The $12.5 billion console and video game business is up for grabs this year. On the console side, Nintendo is off to an unexpectedly strong start with its Wii, a game system that makes its players get up off the couch and move their bodies to direct action.
It has well over 28 percent of the American console market, according to NPD Group, a market analysis firm. The Wii is currently selling at a faster pace than the 360, and the company is releasing its big games this fall, Super Mario Galaxy and Super Smash Bros. Brawl, though neither is as popular as Halo.
Sony, with about 14 percent of the market, was hurt when the release date of Grand Theft Auto IV, a game it was counting on to increase console sales, was pushed back from October into the second quarter of next year.
Microsoft, which has 57 percent of the market, has declined to say what is causing some of its Xbox 360 to stop working, or how many machines have been affected. It has set aside $1.1 billion for repairs, a figure that suggests to industry analysts that the problem could affect a third of the 11.6 million 360s already in the hands of consumers.
Microsoft has said that it will fix any faulty Xbox 360 free of charge.
The most likely explanation of where the engineers went wrong is that the 360s are poorly designed to deal with the intense heat generated by game play and that computer chips and other electronics may be popping off the motherboard, said Richard Doherty, an analyst with the Envisioneering Group, a technology assessment and market research firm.
Mr. Doherty said he thinks that Microsoft, in an effort to put is machine into the market a year ahead of the Sony PlayStation 3, had skimped on product testing. He said that the failure rate among 360s is almost unheard-of among consumer electronics, where having even 1 percent or 2 percent of machines fail is considered a major problem.
He has been doing surveys of video game consumers, and results suggest that their patience is waning and that news of the problems is dissuading some potential buyers, he said.
Even die-hard users, he said, are wondering why they cannot take their machine to a store to have it checked out, rather than wait for it to break.
“It’s dissipating a tremendous amount of momentum they built up prior to July,” Mr. Doherty said, referring to when Microsoft first publicly discussed its $1.1 billion repair fund. “This is going to get worse before it gets better.”
But some financial analysts said that the eventual damage to reputation and revenue may not be so profound. Evan Wilson, an equity analyst with Pacific Crest Securities, said he thought that Microsoft’s fix-it-free policy had mollified many avid game players who have been among the first to purchase the 360.
Aaron Greenberg, group product manager for Xbox 360, said the repair campaign is aggressive and that the company, while it is not discussing what has gone wrong, is not taking the failures lightly.
“It’s our equivalent of the Blue Screen of Death people talk about with Windows,” he said, referring to the derogatory vernacular used to describe what happens when a PC running Microsoft’s operating system mysteriously stops working.
In the case of the Xbox 360, affected users have taken to calling the problem the Three Red Rings of Death. That’s because when the 360 dies, three lights on the front of the console blink red.
“It started getting really loud,” said Michael White, 27, of Montreal, a high school teacher, who said his system died in April. “You expect somebody’s expensive product to be more durable than that.”
Is he infuriated? Not really. “I’m a happy customer,” he said, given it only took three weeks to repair and he likes the games on the system.
Others are feeling slightly less generous — or, at least, their spouses are.
“My wife told me she didn’t want me to buy anymore Microsoft consoles,” said Joshua Bridges, an accountant in Spring, Tex. “But I told her I’m a huge fan of the games that come out for this platform.”
Chief among his interests is Halo 3. He said he likes the fast-twitch action, but particularly the story, which involves soldiers battling against an alien race called the Covenant for control of a destructive force called the Halo. Halo 3 is the last in a trilogy. When it comes out on Sept. 25, the avid fans will be waiting in line at video game retailers across the country. More than one million units have already been ordered.
For the last three years, a team of 250 full-time and part-time designers and engineers at Bungie Studios, the development house that is owned by Microsoft, have been assembling Halo 3, said Frank O’Connor, the game’s head writer. (He declined to say how much money they spent on the game).
Developers felt enormous pressure, he said, and he hopes this version will be the most popular ever, particularly given new features, like the ability of players to record and make short movies of the action they just played.
“Instead of being able to say: remember the time I did that one thing? Now they’ll be able to save it and show it,” Mr. O’Connor said.
One question is whether it can help Microsoft sell more consoles to mainstream consumers, or to those who may be concerned about the reliability of the 360 systems.
But there is little doubt the faithful will be there in force, and thrilled about it, having forgiven Microsoft for the flaws in its console.
“I’m on my third 360,” said Benjamin Lin, an 18-year-old Halo enthusiast from Seattle, “and it’s working great for me.”
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ing awesome games. I feel the same way about my 360. Sure, it's gonna be out of commission 2 weeks out of the year, but for those other 50, it's gonna provide me hours and hours of ridiculously great gaming entertainment.
