Jake Metcalf over at 8Bit Joystick.com has recently posted an interview with an "individual who has worked on the Xbox 360 project for many years", who goes into explicit detail about the extremely high failure rate of Xbox 360 consoles since the console's launch in 2005. While normally we take such anonymous interviews with a grain of salt, you may remember Metcalf as the man who broke the story on Bungie leaving Microsoft a week before any official word was released. His source details everything from the various reasons for failure, and how much Microsoft knew about the system's instability before the product was shipped. If there's truth behind this, it's downright disturbing.
The manufacturing test equipment had major gaps in test coverage and wasn't reliable or repeatable. Manufacturing processes at all levels of suppliers were immature and not in control. Initial end to end yields were in the mid 30%. Low yields always indicate serious design and manufacturing defects. Management chose to continue to ship anyways, and keep the lines running while trying to solve problems and bring the yields up. Whenever something failed and there was a question about whether the test result was false, they would remove that test, retest and ship, or see if the unit would boot a game and run briefly and then ship. 360 is too complex of a machine to get away with that.
Metcalf's source also cites the lack of a sufficiently staffed and skilled engineering team causing problems that could have been easily avoided had proper funding been given to the project.
Reasons for the failures vary, but the anonymous interviewee narrows it down to one main source - the GPU.
The main design flaw was the excessive heat on the GPU warping the mother board around it. This would stress the solder joints on the GPU and any bad joints would then fail in early life.
Hit the link below to read the whole story on what could possibly be one of the most ridiculous instances of big-business ineptitude in the history of the gaming industry.