They've announced a short time ago that they are prepared to wear a massive $1 Billion charge in order to extend the warranty on all XBOX 360 consoles from one to three years.
You can get the full scoop over at the Dailytech folks.
By several metrics, the Xbox 360 is the most successful console so far of this generation. Despite the startling pace of the Wii, the Xbox 360 still has the most consoles sold worldwide and the longest list of games and exclusives. For a gamer looking for online-enabled high-definition gaming today, the Xbox 360 appears to satisfy those needs.
One often overlooked factor when considering a console purchase is reliability, an area that is apparently where the Xbox 360 falls short. Anecdotal evidence is heavily pointing to Microsoft's latest console as being significantly more prone to failure than what consumers are accustomed to.