The Xbox 360 will forever carry the stigma of being an unreliable console that's prone to a common failure known as the Red Ring of Death, or RROD for short.
The hardware malfunction is well known and publicized enough for Microsoft to acknowledge and extend its warranty coverage three fold to cover the design flaw. The warranty extension policy itself cost Microsoft a billion dollars – incentive enough to fix whatever was wrong with the Xbox 360.
While Microsoft will never divulge failure rates of consoles past and present, independent warranty provider SquareTrade has data suggesting that the latest revision of the Xbox 360 hardware, codenamed Jasper, has the RROD problem mostly solved. Check the graph below:
Overall, over the last couple of years, the Xbox 360 is still most prone to failures even when not taking the RROD defects into account.
Check out the full SquareTrade report here (PDF).