I'll confess I don't have an Xbox nor do I have an Xbox 360. I'm a Sony guy at heart in the last several generations of consoles. Though I do have a Wii as well for when I want to flay around in an ungainly manner. Back in the earlier days of the console wars I was the owner of a Sega Genesis and its various upgrades.
There were several reasons I decided against the Xbox 360 when I thought about buying one of the latest generation consoles. The primary one was the type of games that I like to play. While I play a little of everything I'm not as enamoured of the first person shooters as I once was. I also am drawn to turn based RPGs and rather quirky offbeat games. At the time the PS3 and Xbox 360 hit the market Sony had many more of the games I like in its catalogue. So I chose to stick with Sony and the PlayStation 3.
The other reason I didn't get an Xbox 360 was the sheer number of them that needed to be returned and replaced. It seemed like the majority of people who had bought a 360 had to have it replaced or repaired. I can't think of any other recent consumer electronic device that had so many problems. Not only did it have problems but they didn't go away for a long time.
Making that type of mistake for such a long period of time cost Microsoft a great deal both in terms of reputation and in terms of money. Actually Microsoft paid a great deal when it came to the Xbox. Not only to cover the costs of so many broken Xbox 360s but also to just get into the console gaming market.
Inside story: The birth of Xbox is a series of reminisces from Ed Fries who was the vice president of game publishing at Microsoft. While not a comprehensive history it gives glimpses into what went right with the introduction of the Xbox to the console market.
Xbox 360 defects: an inside history of Microsoft's video game console woes is a much longer article. It looks at what went so wrong with the introduction of the Xbox 360. Not many companies have the deep pockets to get themselves out a mess as bad as the Xbox 360 debacle.
I'll stick with my PS3 and Wii for now. I may change my allegiance when the next generation of game consoles appears on the market. Or I might way to see if any of the new ones have teething problems like the 360 did.