During the episode, the Watchdog team sends Sony a technical report for three PS3s which had succumbed to hardware failure. This is one of Sony's biggest issues with the report -- Maguire explained, "The testing concerned a sample of only three PS3s, which cannot, on any basis, be deemed to be representative of a UK user base of 2.5 million."
According to Maguire, Sony's got some numbers of its own for hardware failure rates. With a quick search of the company's warranty database, Maguire found that, "fewer than one half of one per cent of units have been reported as failing in circumstances where the yellow indicator is illuminated." You should be able to watch the controversial episode on the Watchdog site within the next few days (or after the break) -- but GamesIndustry has the entire transcript of Sony's letter for your immediate perusal.