Yup, that's right. It's said that it'll cost them around $1billion, but it seems that they actually do care about customers! :o :o :o :o
Consoles are now under manufacturer warranty for three years, which seems damn good to me (I'll have 4 years, since Barlcays gives it an extra year =D).
Previously purchased consoles have this warranty also. So to put it in perspective, launch consoles are now covered until November 2008.
Microsoft say they will replace/fix consoles completely free of charge, and even pay for shipping back and forth.
Maybe now people will stop moaning...although this will probably only make people take less care with their consoles, knowing that they can just get a new one anytime they want for the next three years... <_<
Full article here:
http://uk.xbox360.ign.com/articles/801/801684p1.html