Xbox Sales Success Isn't Without Bumps

Like a million and half other people, Jonathan Crain set up the family's new Xbox on Christmas morning. The game machine, released by Microsoft just in time for the holiday season, "worked fine for a little over a week, then it started locking up." The new toy's troubles began about an hour after Crain had read some newsgroup posts about other people's Xbox problems.

So Crain, a Las Vegas-based business consultant, called Microsoft customer support. They told him he needed to reset the hard drive, but that he would lose everything saved on it so far, such as game scores.

"I told my kids about that and they nearly had a heart attack," Crain says. So his solution was to buy a $37 memory card and transfer the data to that. Then he called Microsoft again, and a technician walked him through resetting the drive. It didn't fix the problem.

If you peruse Internet newsgroups devoted to gaming, you'll find plenty of stories like Crain's. But does that mean that Xbox users are plagued with defective units and poor service? Not necessarily. The Internet has a way of exaggerating a few people's problems.

"If you get a group of customers with bad experiences, [the problems] will get posted," says Rob Enderle, a Giga Information Group analyst. "In this day and age you have to treat every customer as important."

This is especially true if you're Microsoft, the company everyone loves to hate. Gartner Group Research Director P.J. McNealy sees Microsoft as "a big target, and they're getting hammered for it." The Xbox problems are "an issue because it created a PR problem, but it doesn't reflect badly on the product" overall, Enderle contends.

Customer Care

No one could argue that the Xbox's successful rollout has been trouble-free. After all, with an initial run of about 1.5 million that sold out in a few weeks, from a company with no real hardware experience, there are bound to be some problems.

But Circuit City spokesperson James Babb reports that less than 1 percent of Xboxes sold by Circuit City have been returned. Other observers, including Gartner's McNealy, agree that the number of actual problems is quite small.

But reports of poor customer service may be more of a headache for Microsoft than the actual number of defects. Dissatisfied customers are posting stories of defective systems getting replaced by defective systems, and faulty audio chips that cannot yet be replaced at all.

Microsoft isn't supporting the Xbox directly, but has contracted other companies to handle such problems for it. But the software giant still bears the responsibility and, according to Enderle, has made a mistake somewhere in that contracting. "One of the [Microsoft support] contractors...wasn't doing its job properly. This is always a problem when you outsource support...I expect they'll take more care next time."

Microsoft, at least publicly, doesn't acknowledge a problem.

"I can't say enough good things about the level of efficiency with which Microsoft has executed its repair and refurbishment plan," says John O'Rourke, director of Xbox sales and marketing. "Microsoft is demonstrating a deep sense of care for its new Xbox customers."

Gartner's McNealy agrees that customers have nothing to worry about. "I haven't seen any widespread service problem," he says.

Few Complaints

The stores selling Xbox certainly aren't complaining. Circuit City's Babb reports that "We were expecting the sales of Xbox to be strong, and the sales continue to meet our expectations."

Charles Hardy works on the floor in the Electronics Department at the San Leandro, California, Target store, so he hears from customers firsthand.

"People are back here discussing the pros and cons of pretty much everything. I haven't really heard anything overly negative [about] the Xbox," Hardy says.

But customer Crain's feelings remain mixed. On one hand, he believes "there's no way they're going to put a product out there that's that defective." But then, "I think it's odd that it works for a while and then locks up [in my experience and other people's I've heard about]. They could have a greater frequency of problems as people use this."

At least some Microsoft contractors are doing their job. Crain called customer support again when the reset didn't work, and within two days received a box to ship the defective unit back.

"They promised within seven to ten days they'd have it fixed and returned." It's been less than a week, but he (and his kids, undergoing Xbox withdrawal) are watching the mail for a working machine.