I can't believe anyone is defending Microsoft for this. Sure, they gave him two options, but those two options are:
1. Wait while his perfectly functioning machine is unable to play any current games, even though there were no prior warnings that that could ever happen.
2. Pay over $100 (which is not a small amount of money) to have his perfectly functioning machine fixed, even though there is nothing wrong with it. This happened because of a screw up on their end, not his.
Also, "buy a PC" is not a good answer, either. I'm primarily a PC gamer myself, but believe or not, PC does have it's issues, too. Not to mention it's more expensive to buy a PC than it is an Xbox. Even if you buy all of the parts and build it yourself, there's no way it'll be as cheap or as convenient as going out and buying a machine that you know will work (at least, until this problem came up).
As people have mentioned, call back and be as annoying as possible. The more pissed off and annoying you get to them, the more they will give you to shut the hell up. It could even result in a free repair. Customer loyalty means a lot to these people, and if "sit and wait!" or "pay us more money!" doesn't work right away to shut someone up, they'll go a step further. And then another step if that isn't good enough. They want you to stick around with Xbox, not go anywhere else.
So yeah, if you haven't done anything yet, call them back and rip their heads off. The lower guys will send it up the chain until someone has to do something for you.
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