Rings of Ire

When did it cross that threshold? Walk me through the stages from awareness to growing concern to unacceptable.
What we needed to do was gather data. You can't do this stuff, as you know, anecdotally. It's taken us a while. We needed to make sure that what we were able to announce would be able to improve the quality of the box by gathering the data. Also, to roll out something of this nature on a global basis requires logistics in place, as well as to calculate the costs. Obviously, this is not an inconsequential amount of money. We needed to make sure that we did this once and did it right, and so it's taken a little while. I couldn't put a specific number of weeks or months on it, but this is not something we thought about last Monday and figured we should do this week. This is something that obviously teams around the world have been working on, to make sure that: A) we take care of our customers, because they've taken care of us, and we haven't done a good job recently of taking care of them. and, B) captured all of the costs so that we could take a one-time pretax charge.

How did you determine the three-year period for the extension to the warranty?
Three years seems like a reasonable amount of time for somebody to have a piece of consumer electronics of this nature. We felt—certainly, I think it's unprecedented that someone's had a longer warranty on a console than this. I can't remember. But we felt three years—and certainly, the folks we've spoken to in the last half hour and some of the community feedback seem to think that this is more than fair. If you're a gamer and for three years we cover you, then we feel that you've gotten good value from the box. It's not an exact science. Two years, three years, it felt like fairness more than anything else for us.

If someone already has a refurbished box, is this for repair? New Xbox 360s? What is it exactly?
We're going to send you a box. I'm not going to get into details of exactly what that box is, but our goal is to take care of you. Two things here: if you paid us to fix your box, we're going to reimburse you. Simple as that. If you have a problem with your box, we're going to replace it.

Your background is in marketing. You're intimately familiar with PR. It seemed to me that while there was certainly a growing awareness of this problem online and on message boards, it seems as though the mainstream media—and I include myself—hadn't really covered this heavily. Did you feel as though on the PR side that this was coming to a head or a reckoning at all?
No.

Or did you feel like, "Hey, we've dodged a bullet on this so far—let's take care of this now"?
No. This is not about PR. This is not about making us look good. This is about doing the right thing. If you're going to worry about PR, you probably wouldn't do it five days before E3. If you're worried about PR, you'd wait until people went on vacation, I don't know. We needed to make that sure we did the right thing.

Is there any one thing that you can trace the three red lights back to? Because there's been a lot of scuttlebutt on the Internet that it has to do with the epoxy that was applied to key components; that it was either insufficient, or that it was too close to a heat-producing component that was causing that epoxy to warp and chips to come loose. Is there anything that you can say specifically about what's been causing the problem?
No, not really. And you know me; I'm not going to pretend to be technical on this issue, but it's been a multitude of problems. There's no one specific problem that we can point to and say, "That problem causes three red lights." It's different factors, different environmental issues, it's a completely different thing. As we go on in the coming weeks, there may be more information that we're willing to share, but right now, our goal is to make sure that we do the right thing as quickly and effectively as possible. And regardless of what's caused the three red lights, we're going to take care of you.