Microsoft Hit With $1 Billion Charge For Xbox Problems

While the Xbox 360 has been well received in the market place, and seems set to open up another long term market for Microsoft, the company have today announced a write-off which is likely to be in excess of $1 billion.  The figures relates to hardware problems with the Xbox and the cost of fixing these problems, and issuing new 3 year warranties to many Xbox owners. 

The company are very keen to retain the trust and loyalty of their new customer base, after what they describe as an uncomfortable amount of returns relating to hardware problems.  Indeed the company have also honoured a number of complaints even though some had fallen outside of their initial warranty period, such is the cut throat competition in the sector.

Microsoft have not been too forthcoming with details of the failings which they have experienced or the numbers, although they still expect the Xbox division to contribute a profit to the whole group for the year ended 2007.

In a clever marketing ploy, at the same time as announcing the $1 billion write-off the company have also announced plans for a new version of the Xbox, the “Xbox 360 Elite” which is due to be launched in Japan in October 2007. Japan is an area of the world where the Xbox has lagged behind the likes of the Playstation and Wii - something which the company aim to put right.

Microsoft have also announced the creation of a software excellence centre in Canada, after encountering a number of hurdles in their plans to relocate some of the worlds best programmers to the US.  The US administration have tightened up on home land security and immigration issues, which has effected the recruitment of top software programmers from around the world.  Microsoft are confident that the new centre in Canada will give them a major advantage in the future.