Red Ring of Death (RROD), super loud fans, DREs. The hardware problems that the 360 has received this generation have already become popular Internet memes as common knowledge. More seriously, there have been thousands of angry gamers who have had to get their console replaced, sometimes they had to go through the repair process multiple times.
The 360 launched with a 90 day warranty, but Microsoft extended that to a full one year matching Sony and Nintendo's warranty periods. Now Microsoft is offering a retroactive 3 year warranty on ALL 360s. This means if you had to pay to get your 360 repaired before, you'll get a refund. This move is done to acknowledge the very real problems with the hardware and placate the people who have been sitting on the fence about the console worried about losing it.
Microsoft is reporting that this will cost them over $1BILLION over the next few years. Well, maybe if they made reliable hardware in the first place they wouldn't have this problem.
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