Report claims Xbox 360 failure rate is 16 percent

While frustrated retailers claim that the failure rate for Microsoft's next generation console is near 30 percent, Microsoft has said it is likely closer to five percent. So who's right?

The first unbiased measurement comes from SquareTrade, whose business is in handling warranties for electronics. Using a sample of about 1,000 systems, it found that the 360 had about a 16.4 percent failure rate.

SquareTrade handles certain warranty claims for 360s through several retailers, and said that its own research indicates that the issues are a much bigger problem than Microsoft is letting on, but not quite to the extent that some retailers have claimed.

Whether by coincidence or not, the firm's number falls between the two side's claims. Even so, it is far above either the PlayStation 3 or the Wii, which SquareTrade found in the survey to have failure rates around three percent.

Among Xboxes, the "red ring of death" error was said to have accounted for three in five failures. The remainder dealt with disc read issues, as well as various hardware failures including video card and tray malfunctions.

SquareTrade says the red ring of death failures could increase, since it found that overheating and prolonged use seemed to contribute to problems. According to analysts, the industry average failure rate among consumer electronics is said to be between two and three percent.

It is not known how extensive the problem is, but the firm said it guessed that a large majority of the failures occurred in systems containing the original motherboard. Microsoft has since redesigned the innards of the 360 in an attempt to fix the issues.

Microsoft has so far not commented publicly on the report.