Xbox 360 repairs to cost over [euro]700m

Microsoft is to absorb a bill of more than $1 billion ([euro]734million) to fix "an unacceptable number of repairs" to its Xbox 360video game consoles, the company said yesterday.

It also said it had missed shipment targets for the end of June.

Microsoft is under pressure with mounting complaints about Xbox360 failures on the internet and growing expectations that Sonycould slash the price of its rival PlayStation 3 console at a videogame exhibition next week.

So far, Microsoft has the lead on Sony in the battle for high-end video game machines, but it shipped only 11.6 million 360s bythe end of June, compared with a target of about 12 million, chieffinancial officer Chris Liddell said during a conference call withanalysts this week.

Robbie Bach, president of Microsoft's entertainment and devicesdivision, said the timing of the announcement about the charge forthe quarter ending in June and a new extended warranty wereunrelated to any potential move by Sony.

"This is just one of those things that happens when it happens,"Mr Bach said in an interview. "We reached our conclusion early thisweek, and because it's a financially meaningful issue, we had toannounce it immediately."

The hardware issue has marred a string of successes for Xbox 360,which has built an early lead over the PlayStation 3 withMicrosoft's strong line-up of games and online services.

Mr Bach would not say exactly how many Xbox 360s had beenreturned except that "the number is too large." The company said itwould extend warranty coverage to three years to cover the problemand would reimburse customers who had previously paid for repairs. -( Reuters )