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bertlsenix said:
Focus on Kinect Garbage games and telling lies how they will play like real hardcore Exclusives

Taste in games of the Community is an important point too.
Microsoft had the luck that CoD was around when they needed it combined of course with being the only american console around.
A war game+american console in a war hungry country = profit

But it looks like CoD is getting slowly more uninteresting even for the little kids who buy those copy+paste games every year.
You can see how good other genres did in the last 2 years after they were all nearly dead.
People all over the world care for other things again - If Sony can keep up their great work with exclusives of DIFFERENT Genres with great story telling and innovative gameplay even 360 Fans will look over to it as it is happening already.
Microsoft can't keep up with the yearly releases of their 3-4 franchises they have combined with those Kinect shovelware.
But next Gen they won't be able to secure 3rd Party Exclusives(especially not those from Japan) cause Sony won't make the same mistakes again with the high price point,late release and an architecture that costs to much time and money to understand for studios that aren't 1st Party.

wow lol. You sir have a real issue with Microsoft, a lot of hates in your post :) Still, cool story hehe.

Back to OP:

Exclusives: Exclusives is not really a big issue as Microsoft has almost the same number of exclusives (third or first party) than Sony for instance (including XLBA). But I still think that more AAA from first party studios would be good thing but not a game changer.

Kinect: Like it or not, Kinect is a huge success for Microsoft and they need to build up on that but at the same time; I hate seeing Microsoft focusing a bit too much on Kinect title and not enough on "core" games. With this new studio in Vancouver and maybe few others; Microsoft needs to deliver more AAA core games without relying on Kinect. At the same time if your AR glasses are really coming true, this may be really cool

So my first vote is for Japan/Europe: Microsoft needs to get them onboard. I agree that Japan is not that relevant (if we look at this generation) but it is still helping; especialy if you look at the numbers from Nintendo. Having a much bigger market share over there would not be bad :)  For Europe, Microsoft is not bad but Sony is still ahead and I believe that it is because of this false assumption that Sony is "gaming" company who wants only to please the gamers and Microsoft is a big bad evil trying to make money.

My second vote: Obviously that RROD issue was VERY bad for Microsoft's image. And they will need to build back a good image as I can see a very negative impact from the consumers in the first few months (they will be afraid of it and hesitate before to buy the first version of the 720).