A new car built by my company leaves somewhere traveling at 60 mph. The rear differential locks up. The car crashes and burns with everyone trapped inside. Now, should we initiate a recall? Take the number of vehicles in the field, A, multiply by the probable rate of failure, B, multiply by the average out-of-court settlement, C. A times B times C equals X. If X is less than the cost of a recall, we don't do one.

--The Narrator, "Fight Club"

Next, an analogy.

The staff of Level Up have been Laker fans of long standing. This, in turn, has made us fans of one Kobe Bean Bryant. But this fandom is not absolute. Nor does it preclude the right to critique, to question, to opine--especially in situations best described as force majeure. We did so when Bryant, in the days immediately following his being accused of rape, attempted to use his up-until-then squeaky-clean, devoted family man persona as his defense in the court of public opinion, saying, "But you guys know me, I shouldn't have to say anything. You know I would never do something like that." Um, no, Kobe. We knew you--at least, we thought we did, when thought you might be the one NBA player that wouldn't cheat on his wife. But since the best-case scenario here is that you broke your vows, we'd be fools to assume your innocence based on our "knowledge" of your character. As for more recent matters, when Kobe finally goes before the media--either this summer with the U.S. men's basketball team or this fall during training camp--we'd want to know exactly what was going through his head during his recent tantrum, which--as warranted as it may have been given the ineptitude of Lakers' management--went on far too long and far too disrespectfully to be swept under the rug and forgotten. Blandishments like "I haven't thought about that in a long, long time," and "What I say is what I say. We'll just have to see where it goes," aren't good enough after an outburst of that magnitude. In other words, when something of this magnitude happens, all former assumptions and good faith are inoperative. The offending party begins once again at zero.

Similarly, we like Peter Moore, Robbie Bach, and a number of other Xbox employees. They've built a great online service; they've delivered some great games; they've assiduously wooed third parties; and they've snatched a good deal of thought leadership in the process, forcing Sony to alter its pricing strategy much sooner than expected. And, to be perfectly clear, our just-before-launch Xbox 360 is still working flawlessly. But the recent announcement that the Xbox failure rate is significantly higher than the generally accepted 3-5 percent standard for consumer electronics products raises questions some important, as-yet unanswered questions. Did Microsoft's zeal to have the Xbox 360 both launch first and turn a profit--after the first Xbox launched second and lost billions of dollars--cause it to cut corners in a headlong rush to market, resulting in the current debacle? What, precisely, are the factors causing Xbox 360s to fail? What is the failure rate? How many devices have been returned thus far over the flashing three red lights? Was Microsoft aware of the magnitude of this problem before it launched the Xbox 360 Elite?

In the absence of full and forthright answers to these questions--answers that are critical to restoring consumer confidence in the Xbox 360--it is our firm belief that Microsoft should strongly consider a product recall, or at the very least, offer to replace those machines whose batch numbers indicate that they were manufactured before the design flaws were corrected.

Level Up: How aware was Microsoft of the scope of the three flashing red lights problem when it shipped the Xbox 360 Elite?

Microsoft: The three flashing red lights is a general hardware failure. Following a thorough investigation into the issue and with on-going testing, we’ve identified several factors that can cause general hardware failures.

Level Up: During the run-up to the release of the Xbox 360 Elite, several Microsoft executives were careful to state that other than the addition of HDMI and a larger hard drive, the internals of the Xbox 360 Elite and the Premium/Core are identical. Are these statements still operative, or were any changes made to the Elite's internal components and design in an attempt to address the three flashing red lights problem?

Microsoft: We continuously work to improve the cost, manufacturability, design and performance of the console. Replacement of component parts and other improvements are a usual practice in the consumer electronics industry.

Level Up: When do you expect Xbox 360s--Core, Premium and Elite--with redesigned internals to arrive in stores?

Microsoft: We have already made improvements to the console to address the situation. It is still possible that consumers could receive a console that ultimately produces a three flashing red light error message, but if they do, they are covered for three years under this specific warranty.

Perhaps James "J" Allard should have made the calls to journalists rather than Moore; after all, his title is corporate vice president of design and development for the Microsoft entertainment and devices division, including Xbox and Zune; what's more, when the "design or manufacturing?" question was put to Allard and Moore's boss, entertainment and devices president Robbie Bach, during a conference call with the financial community, he replied:

You should think of this as an issue that's Microsoft's responsibility. The partners who have done assembly and component work for us have done good work; we're very proud of working with them; we're going to continue to work with them. So you should think of it as a Microsoft design issue. Again, since it's multiple things, I hate to even point at design. To get at the heart of your question, it's really our responsibility, not anybody else's.

Again, if Bach is correct and this is problem is truly design-related rather than manufacturing-related, and Microsoft still can't or won't be more forthcoming, then it should either institute a general product recall, or offer to completely replace any Xbox 360 whose model numbers come from those batches with this design flaw.

We say this for three reasons. First, it took Microsoft months to acknowledge the scope of the problem, long after afflicted Xbox 360 owners were already complaining loudly, attempting to identify the issue, and desperately inventing homegrown remedies. So to finally have Microsoft admit that, yes, there is a problem, is much like a wife who's found lipstick on her husband's collar; strange numbers in his mobile phone; and unspecified charges on his credit card. When he finally admits that, yes, he has been cheating, she's going to feel relieved that, thank god, she isn't crazy. But to simply have that acknowledged, accompanied by a bouquet of flowers, some chocolates and a promise never to stray again, is unlikely to restore said wife's trust. Microsoft needs to issue a full and frank accounting of what took place rather than the modified limited hangout wrapped in an extravagant display of remorse that we've seen thus far.

Second, there are several highly anticipated games shipping this fall--Halo 3, Grand Theft Auto IV, Call of Duty 4: Modern Warfare, Guitar Hero III and Rock Band--whose addictive nature makes it likely that the players of these games will have their Xbox 360s fired up for hours at a time. If the amateur forensic engineers are correct that insufficient ventilation and poor placement of critical components are largely responsible for the three flashing red lights errors, there could be a slew of already-purchased--and about-to-be-purchased--Xbox 360s succumbing to the Red Ring of Death during the height of gaming season. It's going to be hard for Halo 3 fanboys to Finish the Fight when their Xbox 360s are in the shop; what's worse, their Halo 3 multiplayer skills will atrophy during that unscheduled downtime while their unaffected peers continue to perfect their own. And that's just one game; what of the Call of Duty clans forced to leave a man behind, or the Rock Band, uh, rock bands whose drummers disappear in a manner that even Spinal Tap could not have anticipated? In other words, the public relations nightmare implicit in last week's announcement may have only just begun.

Third, absent a definitive statement from Microsoft about precisely when it identified this design flaw and rectified it, it's reasonable to assume that there are still thousands of Xbox 360s in stores with this design flaw. (Remember, Microsoft may have stuffed the retail channel--a contentious assertion that the company and several analysts dispute--with far more Xbox 360s than historical forecasts showed that they could reasonably sell, all in a mad rush to hit their 10 million units shipped forecast.) This means that it's possible for someone to walk into a store today, purchase an Xbox 360, bring it home and set it up, only to discover at some subsequent point within the next three years that his or her 360 is one of the vulnerable models. Even the Xbox 360 Elite is suspect; as shown in the exchange with the company's publicists above, Microsoft won't specify whether it made changes to the design before it shipped.

(We understand that there are many Xbox 360 gamers who are already satisfied with or will be satisfied by Microsoft's stated remedies. Purchasing a console is not like many other devices, given the proprietary nature of the games, so we can appreciate their desire to avoid invalidating the amount of razor blades--disc-based games, Xbox Live Arcade titles, high-definition movies and TV shows, extra controllers, etc.--they've purchased to go with their $399 razor. For them, the terse confession and promises of doing the right thing by way of an extended warranty will suffice, and clearly, this is what Microsoft is counting on. But until a significant portion of the afflicted devices are repaired or replaced, this issue will continue to hang above Microsoft's head like the sword of Damocles; and could even snowball as gamers' 360s literally heat up this fall, inspired by the games we listed above.)

No matter how much Microsoft tries to avoid this information getting out, it will anyway. Given the hive mind nature of the Internet, motivated gamers are going to figure this out for themselves. They'll keep popping open Xbox 360s to look at their motherboard designs--heck, it's thanks to their warranty-busting fortitude that we have as much lay expertise about the Red Ring of Death flaw as we do now. They'll start compiling lists of batch numbers and model numbers. And they'll start to tell each other which models to avoid and which ones to seek. The thing is, they shouldn't have to. Nor should Joe Blow, who doesn't spend all his time reading message boards, walk into a store to buy an Xbox 360 to play Halo 3, only to find out instead he's bought his way into a game of Russian Roulette. Microsoft either has or should have this information; by their executives' own admission, they've spent the last unspecified amount of time gathering data. Yet they refuse to release it.

To be clear, we understand why Microsoft is reluctant to release any of this information. Returning to our infidelity analogy, giving the offended party a blow-by-blow account of the affair is unlikely to produce a renewed bond between the couple. Not to mention the tort attorneys who are almost certainly circling Redmond with class-action lawsuits; we can see why Microsoft would rather wait for discovery, should that day ever come, rather than fully air its glowing-red dirty laundry at present. But Microsoft can't have it both ways: embracing its loyal customers on one hand, running a cost-benefit analysis on the other, while declining to give those loyal and potential future customers the facts they need to make a truly informed decision about the purchase that they've already made or might make in the future. Its execs can't remain silent about what the problem is and the scope of the problem, while still touting the same "what matters is that we're going to take care of you" line they were reciting before they would even admit that there was a major problem.

At a six percent failure rate--just one percent more than the generally accepted 3-5 percent range for consumer electronics products--that statement would still be operative. At 30 percent, it would be unacceptable. Microsoft is saying, "Trust us," but given the sheer number of anecdotes about broken Xbox 360s and customer service horror stories, gamers ought to be able to quantify precisely how much trust Microsoft is asking of them. And the fact that Microsoft won't put a number to the failure rate and won't say which batch numbers are affected--while continuing to leave flawed machines on store shelves and in consumers' homes; while not even giving people advice on how to manage their Xbox 360's life span without resorting to Microsoft customer service--to us, that is equally unacceptable. The bottom line is that the answer to "Why would you knowingly continue to sell a defective product?" should not be "We're extending our warranty program." It is for this reason that we say that Microsoft must either be thoroughly forthcoming about the Xbox 360's flaws, or initiate a recall.