After Microsoft Corp. reserved one billion of U.S. dollars on Xbox 360 game console warranty claims, many reports about an actual failure rate of the latest video game system emerged. The most recent reports indicate that failure rate of the Xbox 360 may be as low as 4.5% and as high as 16%.

According to Square Trade, an independent warranty provider, failure rates of the first revision of Microsoft Xbox 360 are rather high, however, they are not as high as those reported by several retailers.

“Our analytics team just finished running a report on the reliability of the Microsoft Xbox 360, and discovered it has a 16.4% normal-use failure rate. […] Last June, Microsoft released modified hardware on all new and repaired 360s, adding a second GPU heat-sink to fix the console’s overheating problems. It’s highly unlikely any modified 360s were included in our report,” a claim in the corporate blog of Square Trade reads.

It is interesting to note that according to WarrantyWeek, it cost Microsoft $291 million to cover warranty claims in the first nine months of 2007, which is about 4.5% of the company’s product revenue. According to the same source of information, Microsoft's spending on warranty claims nearly tripled during the period.

During the first nine months of 2007, the top 50 USA-based warranty providers together spent roughly 1.8% of their product revenue on warranty claims, about the same percentage as in 2006, which means that Microsoft Xbox 360 does have above average failure rate.

Microsoft officials indicated that the failure rate of the Xbox 360 is about 3% - 5%, however, these correctness of these figures may be questioned as the world’s largest software developer reserved $1 billion in mid-2007 to repair malfunction game consoles that suffer from the so-called “Red Ring of Death” issue.