Wow...

Quote Originally Posted by Gamespot.co.uk
Microsoft extending 360 warranty to three years

Today, Microsoft announced that it is once again revamping its warranty scheme for the Xbox 360. After mounting anecdotal evidence of the system's failure rate due to the dreaded "red ring of death" (three flashing red lights on the console's front panel), the publisher is changing its warranty to cover systems affected by the red ring for three years from the date of purchase. Any console that suffers the aforementioned failure in any territory the 360 is sold can be returned to Microsoft for repair for free, because the warranty also includes shipping charges.

"As a result of what Microsoft views as an unacceptable number of repairs to Xbox 360 consoles, the company conducted extensive investigations into potential sources of general hardware failures," the company said in a statement. The three-year extension is for all 360s, and will be retroactively applied to every console bought since the 360 launched. That means anyone who bought a console in November 2005 will be covered until November 2008.
Microsoft extending 360 warranty to three years - Xbox 360 News at GameSpot

Quote Originally Posted by Peter Moore, Microsoft
All right, let me take you through what we're announcing. So, I don't have to tell you guys how strong the [360] business is, and I think you're going to see proof of that next week at E3. But before we go into E3, we want to make sure that we take care of something that has certainly been on radar screens around the world, and you guys have covered it, and that's the area of quality. We've had a number of Xbox 360 console repairs that have been unacceptable to us over the past few months. So, we've investigated the issue here in Redmond, and we've identified several factors, not just one, but several factors that can cause the general hardware failures indicated by the all-too-familiar three flashing red lights on the Xbox 360 console.

So, here's what we're doing about it. We've made improvements to the console itself that we believe will reduce the occurrence of these issues, and we're also implementing an enhanced warranty program to cover the general hardware failures that are indicated by the three red lights.
Q&A: Peter Moore on new 360 warranty - Xbox 360 News at GameSpot