The storm over the Xbox 360's hardware failure rate comes to a head as Microsoft takes it upon itself to allocate a cool $1 billion USD to ramp up repairs for console afflicted by the dreaded "Red Ring of Death" (RROD). This cost will go towards extending warranties for consoles hit by the RROD from one year to three. Additionally, any RROD repairs will be offered free of charge, and users who have paid to have their consoles fixed in the past will be reimbursed for the costs.

Recall that Microsoft has already bumped up the Xbox 360 warranty in the past in order to address the exact same issue. Today's developments highlight how Microsoft may have underestimated the level of discontent over Xbox 360 failure rates in the past. In fact the discontent seemed higher than ever given the gaggle of recent run of RROD repair anecdotes. It would be no surprise if off-the-record investigation with retailers over Xbox 360 returns proved to be yet another key catalyst for latest warranty extension.

Microsoft's corporate VP of interactive entertainment Peter Moore decides to address the hardware failure rate in an open letter posted at the official Xbox site:

Good service and a good customer experience are areas of the business that we care deeply about. And frankly, we've not been doing a good enough job.

We have been following this issue closely, and with on-going testing have identified several factors that can cause a general hardware failure indicated by three flashing red lights on the console. To address this issue, and as part of our ongoing work, we have already made certain improvements to the console.

We are also implementing some important policy changes intended to keep you in the game, worry-free.

If we have let any of you down in the experience you have had with your Xbox 360, we sincerely apologize. We are taking responsibility and are making these changes to ensure that every Xbox 360 owner continues to have a great experience.

The pledge to repair Xbox 360s at cost is a welcome sign of commitment to consumer satisfaction, but it would also be prudent for Microsoft to rectify any console hardware design issues which are being blamed for RROD as well. In other words, getting to the root of the problem once and for all.