As in amount of money Microsoft make a whole lot more than sony. Yet sony still has more studios for making games. Why doesn't Microsoft invest in game studios? It is a software company afterall.

Because Ms doesn't know what to buy, and is spending all their time on Natal. Microsoft can't really afford to buy all these companies that will be unsuccessful. I hope they show something other than Natal at E3.

It's investing a lot in new studios. People just like to ignore it =/

like what? I know they own turn 10, remedy games, and the gyuys who made crackdown. Who else?

Here are their first party studios:

• 343 Industries: A studio set up to develop future Halo related productions^[6].
• BigPark: Joy Ride.
• Firebird Studios: Set up to help push the visual boundaries of all Xbox 360 titles. Also working on an unannounced game.^[7]
• Spawnpoint Studios: Working on a unannounced Project Natal game.^[8]
• Lionhead Studios: Black & White series, Fable series.
• Rare Ltd.: Banjo-Kazooie series, Conker series, Perfect Dark series, Viva Piñata series, Killer Instinct series.
• Turn 10 Studios: Forza Motorsport series.
• Xbox Live Productions: Fable II Pub Games, South Park Let's Go Tower Defense Play!
• Wingnut Interactive: A studio set up in partnership with Peter Jackson to produce "filmic games".

They don't own Remedy or Realtime Worlds 

I'm too lazy to list them...

*copies and pastes from Wikipedia*

• 343 Industries: A studio set up to develop future Halo related productions^[6].
• BigPark: Joy Ride.
• Firebird Studios: Set up to help push the visual boundaries of all Xbox 360 titles. Also working on an unannounced game.^[7]
• Spawnpoint Studios: Working on a unannounced Project Natal game.^[8]
• Lionhead Studios: Black & White series, Fable series.
• Rare Ltd.: Banjo-Kazooie series, Conker series, Perfect Dark series, Viva Piñata series, Killer Instinct series.
• Turn 10 Studios: Forza Motorsport series.
• Xbox Live Productions: Fable II Pub Games, South Park Let's Go Tower Defense Play!
• Wingnut Interactive: A studio set up in partnership with Peter Jackson to produce "filmic games".

Edit: Ninja'd by Jaggedsac :D

I knew he was going to get me

Because Microsoft is not only a games company. Video games are a growing part of Microsoft's business but are not the companies focus. In the next few years Microsoft will begin to see increased pressure on the Windows OS and the search engine business. They have yet to release a mobile OS (I know they're working on one) that can compete with Apple or Google's. I guess I'm trying to say they have better places to put R & D and aquisition money than on games.

Microsoft's first party is

343 Studios - Will take over Halo from Bungie after Reach
BigPark - New studio, first game will be XBLA game Joy Ride
Firebird Studios - No games announced yet
Spawnpoint Studios - Working on Natal game
Lionhead - Fable
Rare - A whole lot of stuff
Turn 10 - Forza
Xbox Live Productions - Two random arcade games
Wingnut - Not expecting anything from these guys

So they have 3 current studios, 4 who are essentially brand new and one who seems to be pointless and probably doesn't exist anymore

Beaten to it :(

Just like to add that Microsoft also license out a lot of their IPs to be developed by outside studios. So it's not like they don't invest in games they just do it in other ways

Perhaps Microsoft knows that owning companies means nothing, and that it all comes down to where the developers are. That might be why they're so willing to pay for exclusive games instead of whole studios.

Out of all these studios only Lionhead and Turn 10 have made games that were worth remebering (even though im not a fan of fable). I guess what i mean is that why doesn't microsoft invest in much larger projects like what SOny did with Uncharted, Littlebigplanet, Killzone 2, etc.