Redmond, Wash. - Microsoft said this week that it will extend the warranties on its Xbox 360 video game console, at a cost to the company of $1 billion, after an internal investigation showed the devices can be prone to hardware failures.

"As a result of what Microsoft views as an unacceptable number of repairs to Xbox 360 consoles, the company conducted extensive investigations into potential sources of general hardware failures," the company said.

Microsoft first extended the 90-day warranty on the Xbox 360 to a full year last September, after acknowledging consumer experiences with hardware failures.

The company has now extended the warranty on the device to three years, for any console that displays the dreaded "three flashing red lights" that indicate a failure.

"If we have let any of you down in the experience you have had with your Xbox 360, we sincerely apologize," Peter Moore, vice president of Microsoft's Entertainment & Devices Division, wrote in an open letter on Xbox.com.

"We are taking responsibility and are making these changes to ensure that every Xbox 360 owner continues to have a great experience." 

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http://www.xbox.com/en-US/support/petermooreletter.htm

http://tinyurl.com/36x4uv (CNET)