The way the plan works is that the buyer is allowed one CPU replacement with no questions asked. The new insurance is called the Performance Tuning Plan and is valid only on certain CPUs. It is in addition to the normal 3-year warranty and costs just a little extra to get.

If the processor fails under normal use, the regular warranty fixes it. If it fails under overclocking, the tuning plan replaces the part. This sounds pretty cool to me. I wonder if AMD will follow suit. Pricing for the plan varies from $20 to $35 (USD) making this cheap insurance for overclockers – especially when spending $1000 or more on a top-of-the-line Core i7-3960X CPU.

If your console suffers from three flashing red lights on the “ring of light,” you’re covered. It doesn’t matter if the console is new or used, they’ll replace or fix it for free (including shipping.) So basically, you get a full warranty for one year for any defect, plus two more years to deal with the three-red-rings issue if it crops up.

In addition, if you’ve already paid to have a console repaired with this issue, Microsoft will reimburse you for your expenses.

It’s anticipated that this policy change will cost Microsoft over $1 billion to implement. Yikes. I bet the engineering team that designed the system’s cooling system is in some hot water (pun intended.)

[Letter from Microsoft's Peter Moore]