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Xbox trouble tests Microsoft support

The software giant is scrambling to placate Japanese customers complaining about the company's Xbox video game console scratching game and movie discs.

! -- EDS UPDATE, 2:42 pm: replace graf 4 to provide more detail --> Welcome to the consumer-electronics business, Microsoft.

That's the message from analysts as the software giant scrambles to placate Japanese customers complaining about the company's Xbox video game console scratching game and movie discs.

Complaints began to appear shortly after the Xbox went on sale in Japan two weeks ago. Customers said game discs and DVD movies came out scratched after they removed them from the Xbox, although in most cases the discs were still playable.

The scratching complaints affected "significantly less than 1 percent of systems sold," according to a Microsoft statement, which said that the company will evaluate any Xbox console a customer is concerned about and repair or replace any defective units.

The Japanese complaints come after scattered reports of defective units in North America, where the Xbox went on sale in November.

Analysts said there is no indication that the rate of defective Xbox units is greater than average for a consumer-electronics products. The real question is whether Microsoft can deal effectively with the handful of customers who experience problems.

"I don't think there are many long-term ramifications to the fact there are a few units out there that are scratching discs," said IDC analyst Schelley Olhava. "What could be an issue is if Microsoft doesn't respond to the problems and repair things in a timely manner."

Gartner analyst P.J. McNealy agreed. "If they're happy customers when they get a new disc or a new box, that's all that matters," he said. "This is part of Microsoft's new challenge being a consumer-electronics company: They have to have good customer service."

Indications from online forums are that Microsoft is doing right by customers. Xbox owners reporting their repair experiences in such forums for the most part credit the company with polite and speedy service on repair requests, although several report having to send in their console several times to get a problem fixed.

New York journalist Grant Gallicho told CNET that he sent in his Xbox for repair after it started making a high-pitched noise, "kind of like the hum you hear standing under a power line."

He said Microsoft handled his call courteously and had his unit back to him in a few days--with the humming noise still there. He's since returned the Xbox for a second repair, but he was more troubled by a conversation with a Microsoft tech support representative who indicated unspecified modifications were made to the console on its first repair trip.

"This whole idea that they're adding stuff and taking away stuff without telling the consumer, its so Microsoft," he said. "I'd like to know what they're doing with my $300 game machine. Right now, I'd describe myself as pretty satisfied but very mystified with their customer service."

Matt Rosoff, an analyst for research firm Directions on Microsoft, says the company may benefit from lowered expectations for consumer goods.

"It seems that for the consumer-electronics space in general, their customer support isn't exactly a shining beacon for other industries to look at," he said. "Anytime you deal with mass-market goods, the amount of support you're going to get is minimal. But Microsoft is used to dealing with enterprise customers paying thousands of dollars for licenses, who expect, and generally get, good personal attention."

But this is Microsoft, Rosoff said, so any problems are likely to receive more scrutiny.

"I think the situation in Japan is a little bit of a case that everybody likes to beat up on the big guy," he said.

A Microsoft representative said the Japanese glitches wouldn't affect the planned March 14 launch of the Xbox in Europe, generally considered a much more important market for the Xbox than Japan, where Microsoft faces its strongest competition from market leader Sony's PlayStation 2 and game giant Nintendo's GameCube.

Neither Microsoft nor analysts could say why the scratching problem appeared to be happening with Japanese units but not American ones.