Microsoft admit to breaching an "unacceptable" number of repairs for faulty Xbox 360s - costing the company more than $1bn...

Bill Gates can claim Microsoft succeeded in having the first new-gen console out in the shops, beating Sony's PS3 and Nintendo's Wii - but at what cost? A different kind of bill is now troubling Microsoft - this one for more than $1 billion (�500 million) to cover the cost of repair and new extended warranties.

Microsoft has admitted that the problem of broken Xbox 360s was "bigger than we are comfortable with". And with costs that high, exactly how many customers that means have been effected by the dreaded ring of red flashing lights which signal a system failure can only be guessed at.

Those who have suffered problems will now be given a free three-year warranty, with free repairs for their current problems and refunded postage from sending the machine off, all to try and make up for the disruption.