What do you call a business model where between a third and a half of your products fail?  While most would say a disaster, Microsoft calls it normal.  Numerous sources are reporting the failure rate for new Xbox 360′s is between 33 – 50 percent.  The numbers are absolutely startling.  Microsoft has stated they will guarantee the 360′s for three years, and plans to spend $1.15 billion on repairs.

So if you are planning on buying a next-generation gaming console, do you take the chance on buying an Xbox 360, knowing you have a one in three chance of it dying on you?  What happens if you buy one and it crashes after the warranty expires?  Does this news prevent you from buying a 360?

So how are the other consoles responding to the news?

In a brief moment of clarity, Sony announced it plans to drop the price of the Playstation 3 $100 in the next week.  Sony makes its first smart move since it released the PS3 by trying to capitalize on Microsoft’s technical problems.  Sony will also offer 5 free Blue-Ray movies with the purchase of a PS3.  I’d still prefer a game or two with the purchase of a PS3, but I guess you take what you can get.

Meanwhile Nintendo Wii continues to outsell both systems, and is still impossible to get.  A couple friends of mine now have Wii’s, and they are a blast.  Maybe Sony’s brass should have thought twice before they shot their mouth off.