In an
open letter from Peter Moore, Microsoft announced that they are extending the Xbox 360 warranty to three years, but for certain problems.
Moore announces "a three-year warranty that covers any console that displays a three flashing red lights error message. If a customer has an issue indicated by the three flashing red lights, Microsoft will repair the console free of charge—including shipping—for three years from the console’s purchase date. We will also retroactively reimburse any of you who paid for repairs related to problems indicated by this error message in the past."
My roommate already had this problem with his Xbox. The process involved waiting for Microsoft to ship a special box, shipping it to them, and then waiting. It went pretty quickly and didn't cost anything, but it was an inconvenience, especially since it doubles as our DVD player. On the bright side, Microsoft did replace it, and it now works.
It's good to see Microsoft stepping up and addressing the problem. Not an ideal situation for owners of the early Xbox 360, but the three year warranty helps alleviate worries of a potentially useless console.