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A chance encounter with a UPS service clerk yesterday, led me to an unbelievable and astounding discovery, but before I get ahead of myself let’s start at the beginning:

I received an XBOX 360 Elite from my daughter for Christmas last year (2007); the whole family loves it and we are all somewhat addicted to Rock Band. I had hoped that by opting for the “Elite” version of the XBOX that I would be getting a newer and better tested design, thus avoiding the “red-ring of death” problems that plagued so many people. After five months of light use (about once or twice a week) I noticed that the XBOX would sometimes freeze up, especially when starting up. When this happened the screen would freeze the picture and no fumbling with the controller would help. To unfreeze it, I would have to unplug the system from the power outlet, wait a few minutes, and then plug it back in. This would solve the problem and we would continue on with our game.

Over the course of the last 30 days this problem happened about seven times, and then suddenly last week it froze every time I started the system. The XBOX would randomly stop at some point in the boot sequence, and the screen would just freeze solid. After trying to restart the system about 15 times, I searched on the internet for “XBOX Screen Freezes” and found that Microsoft has a page dedicated to the issue.

I tried everything in the article to solve the issue, before determining that it wasn’t going to be fixed by me; I needed have my XBOX repaired. I called the XBOX support line, and was walked through a series of questions intended to diagnose whether or not I had a real problem. At the end of the process I was told that they would ship a box to me in order to package my XBOX and send back with a postage-paid shipping label.

I received the unmarked, white box within two days and dutifully packaged my system for shipping, including the prepaid UPS shipping label. While running some errands I stopped into the local UPS store to drop it off. As I walked into the store the woman behind the counter looked up and before I had a chance to utter a word she said “XBOX?”

I laughed and said “Yes, do you get a lot of these?”

Her reply astonished me: “We average about sixteen-a-day.”

I do not live in a dense urban area (there are only 45,000 households within 5-miles of this UPS according to 2000 census data) and there are at least 7 other UPS drop off locations within that radius as well. Some quick math: Total US Households = 105 Million and Total US XBOX 360 Sales = 10 Million. That means that about 1 in every 10 households have an XBOX, or in other words, there are about 4,500 XBOX’s within 5 miles of this UPS store.

Even though there are at least 7 other drop off locations near here, let’s assume that this store gets one-half of all the broken XBOX shipments in the area, because it is in a good location. That means that 32 of 4,500 XBOXs are failing and being shipped back daily. For the mathematically challenged, that would mean that about 70,000 XBOXs are failing EVERY DAY! At that rate, Microsoft would need to service every single XBOX over about a six month period.

Even if you assume that my numbers are an order of magnitude (10x) off of reality (due to some unique demographic in Mason, OH), that would still mean that they are servicing at least 25% of the installed base of systems every year, and that does not account for many, many systems that were purchased and used too infrequently to encounter an issue.

How can a blunder of this magnitude escape the eyes of the press and investment community? Why is no one reporting this? I can only surmise that the efficiency of Microsoft in dealing with the issue has mitigated any negatives with regard to the massive number of failures. What did Microsoft do right?

• Efficient, friendly and apologetic tech support.
• Postage paid shipping with packing materials (they even included the box tape).
• Fast repair and shipment back to the customer.

I can’t imagine that dealing with these issues in a fast and efficient manner has been cost effective for Microsoft, but the alternative would have been console suicide. The few people I have heard talk about this are praising them for doing the “right thing”, but I find it hard to give Microsoft points for doing what is necessary to save their business; I can’t imagine what they would have done with this problem if they had a monopoly in the console business as they do in operating systems.

What does all this mean? Did anyone lose their job over this? Do we think that Microsoft will learn from this and emerge a better hardware company at the end? Is this a harbinger of Microsoft’s death and does this mean that Dvorak was right? I would love to know what you think.

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