Microsoft in Trouble Over Xbox Live Downtime

Downtime with Xbox Live may cause Microsoft (MSFT) to post another Xbox-related charge. Microsoft’s Xbox Live service, its internet connectivity application for the Xbox 360, was down during the crucial end of the Holiday season. The service is back online as of Wednesday but the downtime - over three-weeks - angered the 10 million Xbox Live members, many of who pay $50 a year for the service. Microsoft announced that they will be offering a free Xbox Live Arcade game (valued at $5-$10) for each of these members. The company was also hit with a class action lawsuit seeking damages of over $5 million related to the downtime.

Unreliability concerns have plagued the Xbox 360 over the past several months. In July, Microsoft confirmed that they would take a $1 billion write-off to account for future Xbox 360 repairs after it was confirmed that the hardware had an unacceptably high failure rate. The Xbox 360 is the current leader of this generation of videogame consoles, with over 17.7 million units sold. Microsoft expects the unit to post a profit during this fiscal year.

Disclosure: none

Comments

[Tom B:]

The Xbox Live thing is no big deal. I suspect the vast majority of XBox-ers never use it. The Xbox's overheating and catching fire-- that's a big deal. The fact that every XBox is sold at a loss-- that's a HUGE deal. Xbox is another colossal MSFT failure; I don't know why their shareholders don't toss Ballmer out on his butt. Probably because he has some kind of billion dollar golden parachute in his contract.

2008 Jan 21 08:30 AM