If you look at the performance of XBLA games like Shadow Complex and Trials HD, they're phenomenal, actually. It's been very popular, but I feel like maybe now is when XBLA has really arrived as an entity where you can have a launch that big -- it seems like now is the time. Do you think you're reaching critical mass there?

PS: Well, the numbers seem to show that. We had Epic coming with Shadow Complex; obviously a great partner for us in the retail space with Gears, and they looked at Shadow Complex as something they wanted to do Live, and they had great success there.

When you do promotion around Summer of Arcade, when you have tens of millions of people on Live and it goes globally, team sizes are a little bit small, and you can incubate and ship more quickly. I do think it's a really important part of the ecosystem, especially between big retail releases for publishers; it helps even out revenue streams for those publishers, which is nice to see. And in summer, which hasn't always been a hotbed of retail activity, you have something like Summer of Arcade doing the numbers that it's doing; it's good for customers, and it's good for us.

Halo: ODST just shipped, and you have Reach next year. Is there such a thing as too much Halo?

PS: I think there's too much of anything at some point. It's about the quality of what you're shipping. It's great to see the adoption, the customer reaction to ODST; Firefight mode seems to be going over really well, and the new way of telling the Halo story, not in the traditional full start-at-the-beginning, end-at-the-end, really something that's more vignette based -- the customers seem to be reacting well to that.

We need to make sure when we ship any of our games -- specifically Halo, because it's so important -- that the game has a reason to exist, is there to push something creatively, and when it comes to market delivers that in a top quality way; I think ODST did that.

Halo 3: ODST

Reach? We're actually playing through Reach right now, which is great for us this early in the process and for somebody that's been involved in really all of the Halos, something that has the markings of a hallmark release for us, which will be great. But I'll knock on wood on that; we're not done yet.

You have been ramping up your internal studio at MGS, bringing in people like Ryan Payton and Corinne Yu to lead some development. What is going on there right now?

PS: 343 Industries is the studio that we have internally, led by Bonnie Ross, who is one of our longstanding studio managers inside of Microsoft Game Studios, and the amount of creative talent that has come together -- you talked about Ryan, Corinne, Kenneth Scott coming in... There's just a great lineup of people that are very excited about the future of Halo and really the different ways for us telling stories.

Josh Holmes is focusing on Waypoint right now; Waypoint is a new addition to the Xbox experience for Halo customers, something that's sticky between releases. That team, in conjunction with Bungie, is continue to move the state of the art in telling Halo stories. Legends is, I think, an example of the work that they are doing, as well.

With Reach coming next fall, and who knows what 343 is up to, it does make me think -- along with things like economic conditions, the introduction of Natal -- about the lifespan of the 360. Do you have any thoughts on how long we can expect the 360 to be vibrant?

PS: When we started 360, we made a bet on some core hardware technology that we thought could evolve with us. We know that software is pretty core to what Microsoft is about and what we are about inside of the interactive entertainment business, and we launched the New Xbox Experience last fall, completely rewrote the operating system, and I think brought a new set of services and experiences to customers. People really enjoyed that.

Now we're talking about Project Natal, which is fully compatible with all 360s that shipped to-date and adds to the value that people think that they've invested in when they've purchased a console already or this holiday. We think there's a lot of room left in the 360 -- a lot of areas for us to continue to innovate -- and it's not about trying to sell them a new console because we need to; it's about bringing the experiences to light that we think will delight people.

If we run out of headroom at some point, then maybe there's something in the future; we think with the additions of NXE and Natal that we're in a really good space. Live also gives us a channel to obviously continue to bring new content to the platform where it's not just about the hardware capability that you have under your TV; it's about the breadth of services and experiences on Live, and I think today that's been a strength of ours.