Microsoft expects to spend more than $1 billion fixing flawed Xbox 360 video game consoles, which have logged 'an unacceptable number of repairs'.
The blow to Xbox 360's reputation comes as it competes in the marketplace with Sony's PlayStation 3 and Nintendo's Wii consoles, which made their debuts in November of 2006.
Microsoft has sold around 11.6 million Xbox 360 consoles since its US launch at the end of 2005. The figure falls short of the 12 million unit mark Microsoft set as its goal.
Microsoft chief financial officer Christopher Liddell would not disclose how many of the consoles have needed repairs. 'Suffice to say that with a $1 billion charge and the focus we are putting on this it is a significant number and one that has our attention,' Bach said.
Microsoft said it discovered console flaws that cause hardware failures signalled by three flashing red lights.
The problem is one of Xbox 360 design, not something caused during assembly, according to Microsoft.
Microsoft is offering to repair or replace problematic Xbox 360 consoles. It is also extending Xbox 360 warranties from one to three years and offering to reimburse those who bore the cost of fixing the consoles.
