However, a lot has been going on behind the scenes, particularly in getting developers to build games that can take advantage of the technology, which lets a player control a game with their body as opposed to a joystick. In an announcement at the Tokyo Game Show on Thursday, Microsoft noted that nearly all of the big names in video games are working on Natal titles.

Microsoft's list includes Activision, Capcom, Disney, EA, Konami, MTV, Namco Bandai, Sega, Square Enix, THQ, and Ubisoft. Game makers have had development kits in their hands since June, Microsoft said.

"Our goal was to hit 10 million (Xbox Live users) in a year's time," Greenberg said, "and we've doubled it in less time. The majority of Xbox owners on a global basis are connecting to Xbox Live."

Another milestone the Xbox recently reached, Greenberg said, was that with more than 1 million copies of Rockstar Games' monster hit, Grand Theft Auto IV, having already sold on Xbox 360, the console has now reached 16 different titles with 1 million sales or more in the U.S.

By comparison, he pointed out, that's twice the number of million-plus titles that have sold for the Wii in the U.S. The PlayStation 3 has had just two, he said.

While the 10 million total Xboxes sold in the United States is certainly notable, it also must be noted that the console had a full year's head start on its competition.

"You'll be able to see who's gaining traction and losing traction," said Michael Pachter, analyst at Wedbush Morgan Securities. However, Pachter predicted that the 2008 holidays will be even more competitive if the Wii is in better supply and if prices of all three consoles drop further.

The Wii, which sells for $250 and features a motion-sensitive controller, sold 13.2 million units worldwide as of September, Nintendo said. Microsoft reported that the Xbox 360 -- in models priced from $280 to $450 -- had sold 13.4 million units at the time. Then, in October, U.S. sales of the Wii exceeded Xbox 360 sales, according to the NPD Group. Combined with the Nintendo console's strength in the Japanese market, that effectively would bring the two into a dead heat in cumulative sales.

The PlayStation 3, which sells for $400 and $500, has sold 5.6 million units worldwide, a company spokesman said. Sony's PlayStation 2 dominated the previous console generation.

In addition, people everywhere will be seeing yellow as The Simpsons takes Xbox 360 by storm later this summer in advance of the famous Springfield family's big-screen debut on July 27, 2007. Xbox 360 is partnering with FOX to help promote The Simpsons Movie, offering fans the chance to get their hands on one of 100 limited-edition "Simpsons" Xbox 360 Pro consoles through a series of special events and promotions. For anyone who is drooling like Homer about how to win, more details will be available at http://www.xbox.com.

Is Halo 3 beta registration closed?

Yes, phases one and two of the beta have already ended. If you haven't received an email by this point, then you were not one of the lucky few.

Is there no other way?!

If you didn't get in to either phase, then you can still get in by buying Crackdown, releasing in the US, on February 20th. Inside every launch copy of Crackdown is an invite to the Halo 3 beta.

How will the Crackdown invite work?

Once the Halo 3 beta has been activated (start date is still TBD) you simply go to the Downloads menu in Crackdown to download the Halo 3 beta. After that, you will need to launch the Halo 3 beta from within Crackdown. You will need an Xbox 360 with a hard drive and an Xbox Live Gold account.

In the first incarnation, games developed using the free tools will be available only to like-minded hobbyists, not the Xbox community as a whole. Those who want to develop games will have to pay a $99 fee to be part of a "Creators' Club," a name that is likely to change. Games developed using XNA Game Studio Express will be playable only by others who are part of the club.

Next spring, Microsoft hopes to have a broader set of tools that will allow for games to be created that can then be sold online through Microsoft's Xbox Live Arcade. Microsoft will still control which games get published, and it'll get a cut of the revenue.

Down the road, probably three to five years from now, Microsoft hopes to have an open approach, where anyone can publish games, and community response helps separate the hits from the flops.

That would mark a major shift in the gaming world. While people have long been able to create their own PC software, console game titles have historically been created by a far more limited set of developers.

Putting together the required silicon to offer an Xbox experience on a handheld will be a difficult task for whoever designs this portable console, not because of a technology barrier, but because of prices. With the Nintendo DS costing as low as $129.99, and the Sony PSP selling for $199.99, Microsoft will have a hard time bringing the Xbox console to a handheld device at a price lower than $300. The only way people could pay for an Xbox Portable more than what the DS and the PSP cost would be if Microsoft offered with the XP something its competitor can’t; not hardware specs so much as software and services.

Team Xbox envisions a system with a QWERTY keyboard, directional pad, trackball and four action buttons. The article then goes on to examine a wide variety of handheld devices on the market (Sidekick 3, QTek 9000, OQO 01+, etc.) and describes what features that Microsoft could possibly emulate when coming up with its own portable gaming unit. As for the hardware choices, there are a number of possibilities for a processor including Transmeta's Efficeon and XScale (which Intel recently sold off to Marvell). Here's Team Xbox's take on the graphics for the XP:

Of its entire technical specifications, it is worth highlighting that the nVIDIA GoForce 5500 is the first handheld GPU to playback and encode H.264, WMV9 and MPEG-4 video up to 720 X 480 (NTSC) and 720 X 576 (PAL) resolution at 30 frames per second with 24-bit surround sound, making the GoForce 5500 compatible with major mobile TV standards, and capable of both recording and decoding video at DVD-quality. The GoForce 5500 also offers digital photography features, including multi-shot capabilities with support up to 10 Megapixel resolution digital still images.

The new CPU will be built using technology that can reduce heat and power consumption, as well as potentially increasing speed. It will also help Microsoft cut the console's cost.

The improved Xbox 360 CPU will be manufactured using 65 nanometre technology starting in the first quarter of 2007, Chartered Semiconductor of Singapore said. The existing CPU uses 90nm technology.

Although the launch of the Xbox 360 last November was generally hailed as a success for Microsoft, the console has been troubled by reports of overheating causing games to crash or freeze.

These have come despite the unit using a pair of powerful fans, together with heat pipes, to carry heat away from the CPU core.

Hamburger flipper Burger King is considering a promotion that offers 3 exclusive BK-branded games. Each would feature their own characters (in this case, the actual Burger King) in "popular" genres (fighting, action and racing). The action game is apparently similar to Halo, while the fighter combines Street Fighter and Mortal Kombat. Just tack on a "with hamburgers," and you get the drift.

The PNP service will allow gamers to play a game and have simultaneous video chats on-screen with friends and gamers through a translucent HUD. This same display also allows Web browsing, e-mail and other online functonality all seamlessly while in a game world. PNP will also allow gamers to buy new cars and tracks for a game while in that game world. Customized shops within games will allow gamers to purchase new digitally distributed content seamlessly. The fact that these virtual stores can appear in the game universe (something that Xbox Live Marketplace does not currently offer) really shows off the convergence potential of the future of digital distribution.

Harrison alluded to the future of videogames and digital distribution when he said that Sony currently makes games on discs inside boxes in stores, but in the future Sony will be creating and servicing a network of gaming communities. Sony expects to make revenue not just from game sales in traditional packaged media, but through other communities like mobile gaming, in-game transactions, episodic game content, game subscriptions, and game object auctions (something that's huge with MMO games today on PCs). Sony is also launching an international e-distribution network that will provide content that's only available online.

Harrison even referenced MySpace.com as an example of how PNP could bring social-network functionality to PS3 for gamers. Gaming is a community experience, as Sony's online games like "SOCOM" and SOE's games like "EverQuest" have shown. The PC has already built communities around games, but PC gamers constitute small numbers compared to what console gamers can generate. Harrison said that Sony has sold 100 million PS2s and its 6,732 games had sold over 1 billion units worldwide. Sony owns 60 percent of the gaming industry today. Couple that wil online communities and there's a huge audience to tap into.

Now Nintendo is adding fuel to the digital distribution fire. Nintendo President Saturo Iwata said at the Game Developers Conference in San Jose, CA this week that in addition to offering Nintendo classics from the NES, Super Nintendo, Nintendo 64 and GameCube library, Revolution's virtual console will allow gamers to download 1,000 classic Sega Genesis games and an undiclosed number of Hudson TurboGrafx 16 games. Back in the day, Nintendo battled aggressivley with Sega. This fall, the two former rivals will work together to bring digitally distributed content to gamers.

Nintendo also confirmed that game developers would be able to create smaller, innovative games that can be downloaded to Revolution through the virtual console. It's likely that Nintendo will have a system in place similar to Microsoft's Xbox Live Marketplace and Sony's PlayStation Network Platform that allows developers an avenue to sell smaller games directly to consumers.

"In every other generation, the first guy to 10 million consoles was the number one seller in the generation," Ballmer told FORTUNE in an interview on Thursday afternoon. "Did we just get an even better opportunity to be the first guy to 10 million? Yeah, of course we did."

But Microsoft will not formally revise its projected market share for the Xbox 360, and it will not speed up production to capitalize on Sony's delay, because it's already producing the Xbox as fast as possible. "We've been saying 'make them faster' before yesterday," says Ballmer.

When the Xbox 360 launched last holiday season, Microsoft had its own missteps. Shortages led to sales of only 600,000 systems from the debut on November 22 through December 31, far fewer than Microsoft and market analysts expected.

There is still a production bottleneck because of problems with a component vendor, whom Ballmer declined to name, but he expects Microsoft to sell 5 million systems by June. "We're sort-of on track," he says, "though it would've been nice at Christmas to have one for everyone who wanted one."

"Now we're starting to cook. We're building a vibrant, rich and profitable business model for the future," Moore said.

He admitted that the problems were also caused in part by the fact that the console launched in North America, Europe and Japan almost simultaneously, but said while this strategy was controversial, "It was the right decision."

"It's what we needed to do to bring next-gen gaming to a global audience. There have been short-term shortages, but we're driving a clear advantage as we go forward," Moore said.

He went on to highlight the success of the Xbox Live service, stating that more than four million pieces of content have been downloaded since launch. While only 10 per cent of original Xbox owners have used the service, 54 per cent of Xbox 360 owners have connected to Xbox Live - and Microsoft intends to "maintain that all the way through Xbox 360's life cycle."

Ballmer commented to the Citizen: "In these new consumer electronics devices based on new chips, there's always the question of what yield will you get out of the manufacturing process of the new chip. We're getting a little less, but not much less than the yields we expected, and we know that the yields we expected will probably outrun supply."

However, Ballmer noted: "We decided to go ahead and launch rather than wait until post-Christmas and get a few million units out into the hands of users. We're doing our best."

In addition, in remarks at a technology executive conference reported by Reuters, Ballmer quipped, in an apparent attempt to defuse some of the frustration over limited stocks of Microsoft's next-gen console: "The Ballmer children do not have their Xbox 360 yet. I'm in the same boat as many of you. Thanks to the wonders of [financial regulation act] Sarbanes-Oxley, management does not get a free Xbox 360."