Take what you will out of this. Rockstar "Horrified" By Xbox 360... Wouldn't it suck, to be playing your favorite game and then have the console die on you? When will negative press about the 360 end? Because of the hardware issues the following seems clearer and clearer to me:
1. Microsoft will care about making profits than winning the console war. It most likely underestimated the reliability of its own console. As such, the 1 billion plus it set aside for RROD wasn't enough.
2. Microsoft will not win the console war. It will be the PS3 or the Wii.
3. Microsoft will not release the Blu-ray add on for the 360. I think I will most likely be right on this one. If microsoft releases the add-on, it risks increasing the anger towards RROD--its customers with RROD are now angry for not being to play games AND watch movies. It will impact Microsofts reputation when it releases the next Xbox. There are other reasons against Microsoft releasing the blu-ray add-on like: slowing the adoption of VOD, incrasing the value of the PS3, slow adoption of add-ons in general.
4. Starting november of 2008, when the 3 yr warranty starts to expire, a new round of negativity towards the 360 will occur. Microsoft will lose more money as a result, either from extending the warranty again (unlikely) or consumers having less interest in buying the 360 because of bad reputation.
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