They've definitely improved their position, although they are still in third place next to Nintendo/Sony 1st party capability.
But to be honest MS strategy has never been about developing exclusives themselves to a great extent. They want enough 1st party to drive certain franchises (Halo for example, Forza being another) and to push certain directions they want to take (Kinect mainly at the moment).
Beyond that MS are clearly more interested in leveraging third party developers via deals/conditional exclusives and pushing Xbox as the platform of choice to have in your living room for entertainment (which ironically was where Sony started the gen but at that point the message was too early).
I'd say they probably have enough 1st party now to meet their needs. I don't ever expect to see MS match the 1st party of Nintendo/Sony TBH - not saying they couldn't before the usual crowd misinterpret, but because they don't need to and it's not their strategy.
Try to be reasonable... its easier than you think...
