Pro: Xbox 360 Warranty Extension
It was good business sense to extend the warranty
Very few companies do the "right thing" and Microsoft is not one of them. Microsoft is doing the thing that makes the most business sense, which is to own up to the design flaw to prevent their sizable XBOX investment from going down the toilet.
Think about it. If Microsoft continued to deny the problem for another year, likely a very large percentage of XBOX's would fail. Just to guesstimate a number... 50% (reasonable I suppose if 100% on the market are defective). This would result in class action lawsuits and the perceived value of the XBOX brand name (not to mention the MS brand name) would decline significantly.
What they are doing will keep the perceived value of the XBOX brand up and avoid very costly lawsuits and settlements. The $1.15 billion is peanuts compared to the loss of future revenues plus the billions of dollars they've already sunk on the XBOX if they were to do nothing.
The "right thing" to do in this case would be much more costly than $1.15 billion and that's why they're not doing it. The "right thing" would be to set up a recall program to repair every defective XBOX on the market and throw in a little something to say "we're sorry" to the owners. When I go to a restaurant and my steak is not cooked right, they make it right by fixing the problem and giving me vouchers for free meals or desserts every time. They're afraid that I would walk out and never come back otherwise. If I were the owner of one of these defective dead XBOXes, I would demand compensation for the hassle, or sell the damn thing and discourage everyone I know from buying one. This is what anyone should do when buying defective electronics of any type from any company.
If Microsoft did the "right thing" here, it would cost them a lot more in the short run (not as much as the lawsuit route undoubtedly) but would have fantastic payoffs in terms of customer loyalty and brand value perception. Very few companies would do the "right thing".
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Posted by Wiiviews
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