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Isolated Hardware Glitches Mar Xbox 360 Debut

Microsoft on Wednesday acknowledged that it has received some complaints from customers about technical problems with its recently launched Xbox 360 game console. The news comes at a tough time for the company, which had been hoping to dominate the next generation video game market by releasing Xbox 360 well ahead of the competition.

"It's a few reports of consoles here and there not working properly," said Microsoft spokesperson Molly O'Donnell told CNN this week. "It's what you would expect with a consumer electronics instrument of this complexity." The problems include systems that spontaneously shut down or crash to a multi-language error screen. Early indications are that the problems are all related to the power supply overheating.

Though reports of these problems still seem to represent just a small fraction of Xbox 360 consoles sold so far--all Xbox 360 retail units sold out within minutes of the product's initial availability on Tuesday--it's unclear how many systems are affected. Many Xbox 360 sales, for example, will likely sit in boxes until Christmas. In my extensive use of Xbox 360 over the past few weeks, I have not experienced any problems related to overheating or the power supply.

For customers with problems, however, there is little they can do locally. Since Xbox 360 is in such short supply, and will be until after the holidays, they cannot exchange the units at local retail stores. Xbox 360 customers who do experience problems should contact Microsoft at 1-800-4MY-XBOX or visit the Xbox 360 Web site ( for a fix or exchange. Microsoft says it will arrange for overnight delivery of flawed units to a repair center.

Despite the glitches, Xbox 360 is off to a torrid start. Best Buy CEO Brad Anderson has described Xbox 360 as "one of the biggest things that's happened in this industry in a long time," and comparisons to the Windows 95 launch--still the industry standard for product launches--are widespread. With Xbox 360 available to customers several months before the competition, Microsoft understands that timing is important to the device's success. "Our goal with Xbox 360 is to be the worldwide leader in this business," says Robbie Bach, the Chief Xbox Officer at Microsoft. "\[Xbox 360\] is ... the opportunity to be number one." Microsoft is spending over $2 billion marketing Xbox 360 and seeks to sell about 3 million units in its first 90 days in market.

In related news, technology research firm iSuppli has examined Microsoft's two Xbox retail packages and verified that Microsoft loses money on each console, a fact that Microsoft executives had already discussed publicly. According to iSuppli, Microsoft loses about $11 for each Core System it sells and a whopping $153 for each Xbox premium bundle. However, Microsoft expects component costs to fall dramatically over the life of the system, and it reports that it will eventually make money selling the console; this is how Sony and Nintendo operate as well. In the meantime, Microsoft hopes to recoup its costs with massive sales of software and accessories.

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