To the tune of over $1 Billion, Microsoft will not only fix affected consoles, but reimburse people who paid to have their unit repaired otherwise. Despite having an astronomically high number of affected units, Robbie Bach of Microsoft says it is one of those things that “just happens”:
After a year and a half of mounting complaints, Robbie Bach, president of Microsoft's entertainment and devices division, downplayed the timing of today's news saying: "This is just one of those things that happens when it happens. We reached our conclusion early this week and because it's a financially meaningful issue we had to announce it immediately."
I suppose exploding batteries are one of those things that “just happens”, too.
The news wasn't helped any by the sales forecast, which was once again cut. Initially expected to sell upwards of 15 million units by the end of last month, Microsoft eventually cut that number to 12 million. They failed to reach even that, with an estimated 11.6 million devices sold since initial launch.
Considering the console itself is sold at a partial loss, Microsoft is obviously very heavily interested in making sure that the name Xbox never disappears. With Nintendo creeping up on them very rapidly, the last thing they needed was a 30% failure rate in their hardware. Oops.