Speaking to investors, Microsoft's president of the Entertainment and Devices division, Robbie Bach, has indicated that the 360 Elite has a new design that sidesteps the infamous 'Red Ring of Death' problem.

Attempting to pre-empt the question, "Tell me about the specific component that failed that caused you to have to do the warranty reserve", Bach told the assembled shareholders on July 26th:



Key phrase: “new design”: at some point Microsoft designed a better Xbox. The most obvious assumption is that this is the Elite, although Microsoft was not able to confirm that at the time of press. The fact that the Elite is a new design (HDMI for example) is no huge surprise. The fact that it was developed to deal with the Xbox's Red Ring of Death, is.

If that is the case then it means that there are two tiers of 360 owner out there: those with what repair centre Micromart has called an "endemic" problem, and those with a new, improved console.

Bach also had a bit to say about cost reduction, too. “The second part of this is about cost reduction”, Bach said. “And we are, and have been since the beginning, right on track with where we expected to be with cost reduction.”

Last month SPOnG contacted Microsoft about it building additional heat sinks into returned 360s and found the company to be a lot less vocal about cost reduction than Bach is discussing here.

During the meeting Bach also told the assembled shareholders that the Xbox 360 is making more money than its competitors. You can read the story in full here.