The extension of the warranty is fixated around some of our customers expressing frustration – but certainly not all of them. The fact that we're standing so solidly behind the product and stepping up to the alleviation of the problems in a pretty lavish way is a progressive reaction that shows how much we care about our consumers.
We have reached out to retail to make sure they fully understand what is going on – and to gauge their reaction in trade terms to what we have decided to do.
It's been unanimously positive from them, because I think they now feel even more comfortable that there is an expansive safety net for consumers, should they have an issue with the red ring light.
This undertaking is completely voluntary and we are talking to sales professionals in retail to make sure they understand that. Indeed, some of them are now seeing the three-year warranty as another USP for 360. It's ostensibly a very positive message for the consumer.
As with any relatively complex machinery device, we consistently review and enhance the technology throughout the life cycle of the product. The Xbox 360 is no different to that.
The red ring is a manifestation of one of a number of unconnected hardware related issues.
There is no one systemic problem – were that to be the case we probably wouldn't even be running this warranty deal. There are many challenges that can occur with a console, and we have improved the technology and will continue to do so.
We will retroactively reimburse customers who have already paid for repairs and we're confident over time – not only through that vehicle but also with the ever-improving technology – that the problem will disappear.
The three-year warranty does actually give us an advantage over the competition. And the fact that we're now ahead of this thing will heighten people's levels of confidence in terms of the Xbox 360 purchase.
We've earmarked $1 billion for this initiative, but we do not expect these changes to have any impact on our full year financial outlook.
I am very confident when I say that the investments we plan to make this coming year – those that were set out some time ago – will not be compromised in any way.
There are other incredibly competent manufacturers in this business, and I would hope that they will focus on what they're doing. Whether they choose to criticise us for this move I can't speculate on, but I somehow doubt that they would do so.