Well from recent reports Microsoft said the Xbox 360 failure rate falls within three to five percent, what it believes to be well within industry standards. But from Internet reports its much higher than that.

In order for DailyTech to get more accurate results they did the following method, "In an effort to gain a more accurate picture of Xbox 360 failure rate, DailyTech decided to poll retail outlets that sell the Xbox 360 and with it the option to purchase an in-store extended warranty. Out of all Xbox 360 extended warranties sold, we wanted to know how many were claimed by consumers with defective consoles, thus giving us a more accurate failures percentage."

By several metrics, the Xbox 360 is the most successful console so far of this generation. Despite the startling pace of the Wii, the Xbox 360 still has the most consoles sold worldwide and the longest list of games and exclusives. For a gamer looking for online-enabled high-definition gaming today, the Xbox 360 appears to satisfy those needs.

One often overlooked factor when considering a console purchase is reliability, an area that is apparently where the Xbox 360 falls short. Anecdotal evidence is heavily pointing to Microsoft’s latest console as being significantly more prone to failure than what consumers are accustomed to.

Microsoft has said before that its Xbox 360 failure rate falls within three to five percent, what it believes to be well within industry standards. Internet reports from Xbox 360 owners, however, suggest that the failure rate is much higher than that.

In an effort to gain a more accurate picture of Xbox 360 failure rate, DailyTech decided to poll retail outlets that sell the Xbox 360 and with it the option to purchase an in-store extended warranty. Out of all Xbox 360 extended warranties sold, we wanted to know how many were claimed by consumers with defective consoles, thus giving us a more accurate failures percentage.

After contacting several retailers from various regions in North America, the responses were unanimous: the Xbox 360 is the least reliable gaming console in recent history. Current EB Games or GameStop employees who offered information did so under strict anonymity, as it is against company policy to reveal such information to the public. Furthermore, our sources confirmed that EB Games revised its Canadian warranty policies during early 2007 for consoles solely due to the failure rate of the Xbox 360.

EB Games held conference calls for its Canadian stores informing them of the new policy changes and revealing alarming failure rates of the Xbox 360. “The real numbers were between 30 to 33 percent,” said former EB Games employee Matthieu G., adding that failure rate was even greater for launch consoles. “We had 35 Xbox 360s at launch I know more than half of them broke within the first six months (red lights or making circles under the game discs). Two of them were dead on arrival.”

Interestingly, Microsoft has acknowledged that the initial batch of Xbox 360 consoles made during the launch window suffer from below average reliability. In response to an overwhelming defect rate of launch consoles, Microsoft agreed to repair all machines manufactured in 2005 free of charge, and issue a refund for those who already paid for repairs of launch units up until January 1, 2006.

The three flashing red lights – commonly referred to in gaming communities as the “Red Ring of Death” – is a sign of an Xbox 360 hardware failure. The sign is apparently common enough that Microsoft has added an option to its 1-800-4MY-XBOX support line that names “three flashing red lights” specifically.

Final Blade via dailytech.com »