UPDATE - This rumor never came true and was just some dirt rumor spread to create FUD.  Microsoft has fixed their initial design flaw in the Xbox 360 and any 360 sent to the service center will now get the fixed graphics chip.  Since this post was written the reliability of the Xbox 360 has been vastly improved.  There will never be an Xbox 360 recall because there doesn't need to be one.

This is still in the rumor stages but it seems EB Games Australia and Microsoft are not going to be trading valentines next month.  Last July EB Games of Australia recalled all Xbox 360 game consoles and replaced then with the newer systems.  EB did this by themselves without Microsoft's blessing right after Microsoft announced the one billion dollar penalty it would take to repair existing Xbox 360s.

So now EB has somewhere around 10 million AUD worth of recalled Xbox 360s in their possession and Microsoft doesn't want to replace them it seems.  Since it was a recall most of these system are in working order but have the older faulty chipset.  If the failure rate is only 30% then a third of those 360s should be ok.   Since Microsoft is not willing to replace these consoles EB Australia is now threatening to pull all Xbox 360 merchandise from their stores. 

From a purely business perspective doing the total recall might have been a good customer PR move by EB but a stupid one financially considering Microsoft never issued a recall of these systems.  At best all EB can do is send the broken ones in and sell the others as used systems.  It was a stupid move by EB Australia considering there was never a recall by Microsoft.  I'm not sure if they just thought Microsoft would write them a check for all these units or what?  Right now it seems you can't get an Xbox 360 20GB console at any EB in Australia. 

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