I know a bunch of blogs are covering the X-Box 360 stuff and they're doing a bang-up job.
I would just like to offer my own anecdote which, for me, was the deciding factor in not trusting Microsoft's ability to have any kind of grip on reality, at least where the console market is concerned:
I bought my X-Box refurbished from EB Games for about 120 dollars. It was approximately two years old. Not exactly a fossil.
It lasted about one year.
I can't remember now what game I was playing when my X-Box crapped out on me. I just remember that instead of the dashboard I got a warning screen and a numerical code.
I did a little searching online and discovered that my code meant the hard drive was bad. Bad meaning not-recoverable.
The one-year warranty I had purchased from EB Games had, naturally, expired.
"Not a problem," I thought. "I'm sure Microsoft has a good system in place for repairing or replacing hard drives gone bad."
So I called up the hotline and explained my situation.
The nice lady on the other end said that they could indeed fix my busted machine. For a one hundred dollar servicing fee. And so long as I paid shipping and handling to get it there and back.
Now around this time I happened to know quite a few guys in the barracks that were modding X-Boxes for about 60 bucks. The mod would allow the ol' Box to burn games and movies. They also threw in emulators for all major systems and a whole boatload of ROMs.
1. Pay probably around 120 dollars to send my X-Box to Microsoft so they could rip out my old hard drive and put in a new one that cost them five dollars.
2. Pay probably around 100 dollars for another refurbished X-Box.
3. Pay 60 bucks for someone to rip out my old hard drive, put in a new one and load it up with functionality that would extend my original X-Box.
And, of course, questions sprang into my head. Why wasn't Microsoft selling certificates to computer repair shops to allow them to repair busted X-Boxes for less than the ridiculous 100 dollar base fee, allowing them to re-coup (I would guess) more than their mail-it-in scam? Why was a system only three years old shitting the bed?* Why not put in some redundancy so even if the hard drive does fail you can still play games (though you'd need a memory card to save them)?
So what did I finally decide to do?
Nothing. I was broke at the time (heh, still am). None of the options were actually viable.
But I'm fairly certain which path I would have chosen.
*This made me particularly mad because the X-Box had also been refurbished in that time. A Sega Saturn I bought in 1999 worked, and still works so far as I know - and that system was released in the US in 1995. An X-Box anomaly, or substandard components?