After vehemently denying there being a problem, Microsoft has finally caved in and extended the warranty of the XBOX 360 another 3 years across the board, for those who have the RED RING OF DEATH problem (all other problems are covered by the normal warranty). Furthermore, they are reimbursing everyone who has already paid to fix their RED RING OF DEATH consoles that were previously not covered by the old warranty. This is expected to cost them over $1 billion (before tax), but to Microsoft that’s pretty much a drop in the bucket.
They still won’t elaborate on exactly what is causing the problem; most people speculate that it has something to do with overheating, since returned units seem to come with extra heatsinks applied.
As of yet, there are no plans for a proactive approach, in terms of a mass recall to fix all of the 11.6 million consoles that have already been sold (as a side note, that is quite an impressive number, and right in line with Microsoft’s predictions).