A new report claims the failure rate of Xbox 360 consoles is a staggering 16.4% - that's almost 5.5x higher than the PS3 and Wii:
A new report claims the truth is somewhere in the middle. SquareTrade deals in selling warranties for electronics, and has amassed their over 1000 warranty claims to come up with some interesting data. The findings were a 16.4% failure rate of Xbox 360 systems, versus a roughly 3% rate for the Sony PlayStation 3 or the Nintendo Wii with sample sizes in the high hundreds. The well-known "Red Ring of Death" error accounted for about 60% of those hardware failures, and thus most system-breaking problems are covered by Microsoft's extended warranty plan.
SquareTrade CEO Steve Abernethy speculated that the future may see an even higher percentage. "It is reasonable to believe these failure rates will increase over time, since the Xbox 360 failure issues tend to increase with prolonged use where overheating appears the main culprit," he said. Abernethy went on to note that while the company didn't track the different variations of the 360, he "would estimate most if not all were the original motherboard."
In taking statistics, the two most important factors are sample size and randomness. By using a pool of over 1000 redeemed warranties, the report's sample size is sufficient. On the other hand, since the sampling was taken from people who have to seek SquareTrade's warranty service out, the possibility exists that the randomness factor could be skewed, leaning towards heavy system users who are more likely to overheat their 360s. This doesn't invalidate the report by any means, but it is worth keeping mind.