The Xbox 360's infamous "Red Ring of Death" hardware problem was one of the biggest storylines of the last generation of consoles. Now, one of the video game executives at the heart of the struggle, Peter Moore, has revisited the issue that ended up costing Microsoft over $1 billion when all was said and done.
"It was sickening," Moore, a former Microsoft corporate vice president who now works as the CFO for Electronic Arts, said about the Red Ring of Death issue as part of a new IGN podcast.
"I took a lot of the abuse because I was the face of it," Moore added. "It was ultimately on me. But this was a thing that we actually couldn't figure out what was going on."
Microsoft later discovered that the issue was triggered when the console got too hot. At this point, the system would stop working, and three red lights would appear.
Moore went on to say that he vividly remembers telling then-Xbox boss Robbie Bach about the problem.
"'I think we could have a billion-dollar problem here,'" Moore remembers telling Bach all those years ago. "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."
Also during the podcast, Moore recounted an even more important meeting about the hardware issue, this one with none other than Steve Ballmer, who was CEO of Microsoft at the time. Moore's team devised a plan to remedy the situation that involved Microsoft shipping affected customers FedEx boxes which they would then pack their console into and send it back to Microsoft for fixing or replacement.
All of this is to say, it wasn't going to be cheap.
"I calculated with my finance team [a cost of] $1.15 billion," Moore said. "I always remember $240 million of that was [for] FedEx. Their stock must have gone through the roof."
"I am trembling, sat in front of Steve, who I love to death, but he can be an intimidating human being. And Steve said, 'OK, talk me through this,'" Moore added. "I said, 'If we don't do this, this brand is dead.'"
"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" -- Moore
Moore referred to this as a "Tylenol moment." This is in reference to a series of deaths in the 1980s that were the result of tainted pills. Tylenol owner Johnson & Johnson removed all capsules from sale and took a brief hit. Something somewhat similar was happening with Microsoft and the Xbox 360.
Ballmer agreed to Moore's proposal, even though it meant a billion-dollar loss.
"He said, 'Do it,'" Moore remembers. "There was no hesitation. And I'm thinking, 'I'm about to crater Microsoft's stock'. But actually, nothing moved."
"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."
Asked how the entire Red Ring of Death situation made him feel, personally, Moore replied that it was stomach-churning time.
"It was sickening because I was doing a lot of interviews, and it's not like today with social media which would have been horrific, but we were trying to figure it out. We couldn't figure it out," he said.
Ultimately, Moore thinks Microsoft made the right call. In his estimation, the Xbox brand is now worth three or four times more than the $1 billion hit it took to fix the issue. And had that not been cleared up, the Xbox One "wouldn't have happened," Moore said.
IGN's full podcast is hugely fascinating, as not only Moore, but Xbox designer Seamus Blackley and current Xbox boss Phil Spencer also appear. They discuss all manner of topics that Xbox fans might find interesting, from the origins of Xbox to the Xbox One and the future.