All hardware fails at some point, but we generally withhold coverage until a pattern appears, until the problem appears to affect relatively large numbers of people, or when the manufacturer ignores seemingly obvious proof.
Editors at TidBITS have heard anecdotally for many months that users were experiencing failures with Apple's Time Capsule base station/backup appliance units that were relatively new, but outside the warranty period. But with an unknown number sold - it may be hundreds of thousands or even millions, for all we know - it was impossible to determine whether these failures were commonplace or statistical outliers.
TidBITS reader Dean Lombard recently brought this issue back to our attention. He described his experiences with a defective Time Capsule, which died after a short period of use, and pointed to several spots on the Web where other Time Capsule owners were commiserating over their busted backup devices.
The reason we're writing about this now? In late 2009, Apple quietly started acknowledging the problem and replacing certain affected models. And those whose Time Capsules appear to be working properly can do a few things to protect against failure and keep the devices functional.
Symptoms and Suspicions -- Widespread failure apparently began in September 2008, roughly 18 months after the first units were sold. The primary symptom was a failure of the Time Capsule to power up. Users from all over the world - the United States, the UK, China, Australia, and elsewhere - have reported untimely Time Capsule deaths. The  of Time Capsules registered on a site tracking this problem is 19 months and 20 days; hardly acceptable for what is designed to be a backup device, and well outside the one-year warranty.
Heat is the most likely culprit for these premature deaths. Or, rather, poor heat management leading to overheated capacitors. User Ray Haverfield, having looked closely at the issue and modified Time Capsule hardware to resolve it, posits on, "The power supply is well made with good quality components, capacitors etc. [The Time Capsule] is simply dying due to elevated temperatures, as the lifespan of components is greatly reduced running at such a high temperature. Lifespan of electrolytic capacitors is particularly sensitive to temperature."
Haverfield points out that while these devices do have a built-in fan, the fan largely circulates hot air within the casing. He also says that the rubber base of the Time Capsule likely acts as an insulator, worsening the problem.
Since it appears the problem lies mainly with the power supply, as opposed to the hard disk, there is a good chance that information trapped on a dead Time Capsule is retrievable.
The Solution -- The efforts on the part of the Apple user community to organize and publicize the problem have been particularly noteworthy. After being told by Apple that his Time Capsule was past warranty and he was out of luck, user Pim van Bochoven decided to forgo complaining in the usual Apple Discussion Forums and began  in October 2009.
On that site, he collected, tracked, and analyzed data from 2,500 Time Capsule owners whose devices had died in a similar manner and time frame, creating a persuasive argument that this was a widespread design flaw that Apple should rectify. (Again, we don't know what percentage of units sold that 2,500 number represents, but it's a large number in itself, and must be a small fraction of all Time Capsule failures given that only a portion of those whose device died would register its loss.)
In November 2009, Apple posted an internal Knowledge Base article instructing employees to begin checking serial numbers of any dead Time Capsules brought to them by customers; Time Capsules falling into a specific (but as yet undisclosed) serial number range would qualify for a replacement. On 15 February 2010, The Time Capsule Memorial Register site reached 2,500 registered failures and closed, having accomplished its mission of gaining attention for the problem and generating an official response from Apple.
Tactics for Replacement and Recovery -- If you own a dead Time Capsule, you have a few options. First, you can try to have your Time Capsule replaced at no cost by Apple. , Apple will replace your Time Capsule for free if you have a 3-year AppleCare contract on any device; have purchased a computer within the last year (which comes with a 1-year warranty that can be cross-applied to the Time Capsule); or have a Time Capsule whose serial number falls within a specific range.
To pursue this path, call or visit your local area Apple Store or . Note that if you decide to have your Time Capsule replaced, you will have to send Apple your dead Time Capsule, and its hard disk will be erased. While data recovery is thus not a possibility, your data is also unlikely to end up in anyone else's hands as Apple has assured users it does indeed erase all data. Attempting to rescue your data by removing the hard disk, copying the data off, and then reinstalling it voids your basic warranty, and could be grounds for Apple to refuse your replacement. So if data retrieval is a paramount concern, this might not be the best option for you.
For those looking to salvage data, a second option is to find someone to repair the blown capacitors without replacing or removing the hard disk. If you have Ray Haverfield do the job (most appropriate for users in Australia), expect to pay about $100 plus shipping for a power supply repair and fan modification (to better vent the unit). $130 gets your Time Capsule fitted with an external power supply, and the fan modification. Ray also graciously lists some elsewhere in the world, should you want to shop around. Remember though, there are no guarantees with these repairs; these people are not Apple employees and their work will certainly void your Apple warranty.
A third option, should you want to salvage your Time Capsule's data, have some experience with electronic repairs, and not feel comfortable entrusting your device and its data to a stranger, is to repair your device yourself. Haverfield's Web site offers several sets of instructions for performing a power supply repair (see this one.), , and
If you do decide either to have a third party repair your Time Capsule, or to perform a self repair, take a moment to you've had issues with your Time Capsule.
Final Notes -- If your Time Capsule is still working well, consider backing up your data using the Archive function in the Time Capsule view of AirPort Utility. You need a second drive with at least as much storage as has been consumed with backups on the internal drive. Attach the drive to the Time Capsule via USB, then launch Applications > Utilities > AirPort Utility. Select the Time Capsule unit in the list at left, and click Manual Setup at the bottom. In the Disks view, select the drive in the list at left, then click Archive. (You can read more about this process and other Time Capsule and AirPort Extreme hard drive configuration issues in Glenn Fleishman's "Take Control of Your 802.11n AirPort Network.") Backups are especially important if you're storing data other than Time Machine backups on the Time Capsule.
You should also examine your Time Capsule location and venting. You might elevate it off the surface it's on, or position it on its side. The Time Capsule's antennas are designed to work with its broad side flat on a surface, so tipping it may adversely affect Wi-Fi coverage. But modern hard drives can work in horizontal and vertical positions. (Some users on forums have reported noise when the Time Capsule is long side vertical, but that may be related to the fan.)
 with a "green" drive that produces less heat could also help, but may not be worth doing unless you have other reasons to replace the drive. Reports indicate that Apple may have addressed the heat problem in newer Time Capsule units by using drives that run cooler. And of course, adding something like  to your backup strategy would give you an entirely independent backup that could also be offsite, if you locate your backup drive at a friend's house.
Kudos to Pim van Bochoven for the creation of The Time Capsule Memorial Register site, where users were able to transform their individual complaints into a larger, more organized, and more powerful force that encouraged Apple to take action. While it's unfortunate that getting Apple to address a widespread problem required such arm-twisting, it's great to see the user community band together and create momentum for their cause.