XBox360 Failure Rates over 16%

The company that runs "extended warranty" services for Microsoft has revealed that the failure rate for XBox 360 is over 16%. Compare that to 2% for Playstation 3 and the Nintendo Wii. One must wonder how users put up with that kind of horrible service, even though it is familiar to anyone who has worked with Windows. I believe our own failure rate here on Mod-Blog reflects that as well, as I know at least one Mod-Blogger has gotten the red-circle-of-death.

Is this how Microsoft plans to enforce an upgrade cycle?