Why all those Xbox 360s croaked

Last year, Microsoft announced that millions of Xbox 360 consoles were at risk of failing, but didn't say what was wrong with them. It did say that the repairs would cost about a billion dollars to fix, however.

EETimes says it's uncovered the reason for the failure. (The story's headline says it has found out the "truth about last year's Xbox 360 recall," but in reality there was no real recall, just an extension of the warranty and a warning that failures were possible.) That reason: Microsoft decided to design its own graphics chip in conjunction with a Taiwanese semiconductor shop in order to save a few bucks rather than pay a graphics company to do the job. The repair: Go back to ATI, says EE Times, and get them to fix it.

Microsoft's CPU design appears to have failed because it dissipates too much power and heat into the console, causing other components to fail. But much of that is conjecture, as Microsoft has never publicly explained the reasons for the system failures.

Microsoft has acknowledged only a 3 to 5 percent failure rate in the past, but third-party estimates have claimed up to 15 (SquareTrade) or even 30 percent (EBGames) of all units have died in their lifetime. It's impossible to know how serious the problem really is, but that 1 billion dollar figure is the most telling data point.

EE Times also notes that Microsoft isn't the first company to try to deal directly with an offshore chip foundry in an attempt to save money on expensive CPU design and licensing: It's a trend that has affected all electronics businesses in the last few years. It may however be a trend that's on the wane, as such failures aren't unique to Microsoft: Nokia, for example, has abandoned the process of designing its own chips.

How has your console held up? Are these failures causing you to stray away from purchasing an Xbox 360? Fire away in the comments below.