According to FOX News (10pm TV News Report), an estimated 2.5 million Xbox 360s have been reported defective. This could be the reason behind the 1.1 Billion $ fix and warranty extension.
actually i read at a forum that fox come to the figure 2.5 million by a simple calculation. 1 bill divide by 400(price of a pro console)=2.5 mill
I believe they went overboard with that $400 repair cost. Thats the price of the console - not the "cost" MS has to bear to repair the RROD. Maybe the figure of $1.16 bln cannot tell how many consoles MS thinks are defective. MS has done a simpler thing - 11.6 mln consoles sold till now x $100 (i heard it charges $140 to repair the RROD for out of warranty consoles) as "cost" of repair "to Microsoft" = 1.16 bln