Microsoft has responded to customer concerns and taken steps to deal with the many problems customers have been having with faulty Xbox 360 consoles.

The company has announced that it will be covering the costs of all repairs to the console, and has said that hardware failures will now be covered by a three-year warranty from the date of purchase.

We believe that the amount of noise in the blogosphere on this issue has to some degree forced Microsoft’s hand.

The move was announced by Microsoft’s Peter Moore on Xbox.com:

“You’ve spoken, and we’ve heard you. Good service and a good customer experience are areas of the business that we care deeply about. And frankly, we’ve not been doing a good enough job.”

The move will cost Microsoft somewhere in the region of $1bn, but represents a huge PR win for the company, when it was starting to look like a PR disaster.

The Red Ring of Death refers to the three flashing lights which indicate a major hardware failure. The failure rate of Xbox consoles has been estimated to be as high as 33%.

Many bloggers have been writing about the issue, which has become a PR nightmare for Microsoft, fueling the perception that their console is less reliable than its competitors.

However, this move, made possible by the company’s deep pockets, has managed to turn the issue on its head, solving customers’ problems in one bold stroke.

Microsoft is to be congratulated for tackling the issue head on, admitting its mistakes and reimbursing customers’ repair costs. They have managed to turn a PR nightmare into a huge win.