1. Design flaws
2. Small target market
The Xbox's biggest weakness is its flawed design. There are many problems associated with this product therefore there are many risks a potential customer considers before purchasing a Xbox360. Some of the most common problems are the red ring of death, loss of video/audio input or inability to read optical media after installing an update, scratching CDs, and the inability to read CDs.
These problems were the reason Microsoft extended the warranty on the Xbox360. This entailed a $1.15 billion bailout (Acheson-Gray, 2007) to compensate consumers experiencing these flaws. Microsoft inevitably lost more money repairing these problems then it would have if they had put forth a proper initial design.
Relative to the competition the Xbox360 has the smallest target market demographic. The Xbox360 is seen as a console for “hardcore” gamers when compared to the Wii. Most of the games for the Xbox360 are rated Teen or Mature unlike the Wii where most are rated E10+ and under (McCann, 2009). Therefore we are losing potential customers to other gaming consoles because we simply don't market to them. The Wii was the first gaming system targeted not just young male gamers but to families and people of all ages(McCann, 2009).
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