How the Xbox 360’s Red Ring of Death nearly killed the Xbox One

If you were into gaming and bought an Xbox 360 when it released in 2005, you are probably familiar with the term Red Ring of Death. If not, it was one of the biggest catastrophes that can happen when a console launches. Microsoft released the Xbox 360 with a fault in its design, it had the predisposition of over-heating and turning into a brick (or turning back on only to red ring again and again).

The former vice president of Microsoft (who now works as the CFO at EA) has stepped forward, years later, to speak about the "sickening" time during a podcast with IGN. When the problem first started cropping up, Peter Moore and the team at Microsoft were at a loss. They knew that Red Ring of Death was caused by overheating, but they didn't know just how big the problem was.

"'I think we could have a billion-dollar problem here,'" Moore told then-Xbox boss Robbie Bach back in 2005 when the problem began. "As we started to do the analysis of what was going on, we were getting the defectives in…it was a challenging problem for our engineers. We couldn't quite figure out what it was; we knew it was heat-related and there were all kinds of [temporary] fixes."

Desperate gamers had begun wrapping their 360's in towels and putting them in the oven in hopes of resuscitating it after the Red Ring of Death had visited their console.

"I calculated with my finance team [a cost of] $1.15 billion," Moore said. The then-CEO of Microsoft Steve Ballmer understood how powerful the Xbox brand was and did not hesitate to grant Moore the funds to resolve the issue.

Without Ballmer and his decision to put money towards a solution, the Xbox One would not exist.

"If you're an Xbox gamer, you can thank Steve Ballmer for not even hesitating," he added. "Now, we were a wealthy company that could afford to do that. But not even hesitating because the brand was more important. If we hadn't made that decision there and then, and instead tried to fudge over this problem, then the Xbox brand and Xbox One wouldn't exist today."

[IGN podcast]

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