Shane Kim a Harvard business school graduate was chosen as the point man in Microsoft's staggle for control of the worldwide video games business. Microsoft has always had a mixed reputation in games, even after the release Xbox. To fix this Microsoft selected Kim to prove that Microsoft is still serious about investing heavily in its Xbox and PC games.

Observers admire the company's cash hoard but wonder about its attention span and ability to stomach enormous losses in the Xbox division over the long term.

Some of Kim's first acts have been to ax or delay several projects. Since the fall, Microsoft has scaled back its staff of internal game developers from 1,200 employees to about 1,000. Some game developers are privately grumbling that Microsoft has lost its way.

Because there are now so many others making games for the Xbox, Microsoft needs to make fewer titles, Kim said. And Microsoft now also knows which of its in-house titles were hits, like "Project Gotham Racing" and "Halo." That means the company will produce fewer titles, but pour more resources into each one so that they make the Xbox stand out from the other consoles.