Generally speaking their strategy is mostly fine to continue from here. I see three main weaknesses they could improve:

1 - not enough family/everyone titles - and I don't mean Kinect. They need a much better library of titles for families and young kids that aren't Kinect mini-games.

2 - more exclusives vs timed or partial. The cat came out of the bag here and really apart from a few core titles few people see a 360 exclusive as remaining an exclusive. They need to either secure titles fully or pump them out more themselves

3 - improve Japan - to be honest this is probably their Achilles heel. Either Sony or Nintendo will outstrip them here, and if it's more lopsided next gen (for example Sony romping away with it) then this will make it harder for MS than any of the others to truly win WW. TBH I have no idea here because I don't think MS can change things in the region.

Given 3, unless MS really took a strong lead in US/EMEAA over both Sony and Nintendo I think Japan may keep them from number 1 WW so long as Sony/Nintendo do okay US/EMEAA.

Yeah, Japan is their biggest weakness and unless something drastically happens, I don't think it will change much next gen. I don't know if they really tried with the original XBOX, but I know they were trying with the 360 at some point. They did have a few Japanese developers glued to the 360 (Cave being one of them), but they didn't really have too many of the big ones. Of course, I still think the whole xenophobia thing is present in Japan with the 360 (maybe not as much as years ago, but it's still present).

The only way to gain ground in Japan is to get exclusives that are big over there....like...i dunno...Monster Hunter or something. But I doubt that'll happen.

Well pretty much they need to keep doing what they are doing right now except they need to have more 1st party exclusives.

Yeah, but I don't think it will happen.

Microsoft needs to get better with their studio management,

I mean, they closed ENSEMBLE....shuttered DIGITAL ANVIL, broke down FASA, and killed ACES.

Look at what RARE has become under the watch of Microsoft....poor Rare....they were so elite, and now they are just a poor shell of themselves.

Bungie was Microsoft's BEST developer, and apparently, they wised up, made a deal, and hopped on the first thing smokin ASAP. Good for them.

Honestly, I think we've all seen enough of Microsoft's creative management style.

If Microsoft wants to win, the really need to get better in this area.  Better know how is sorely and badly needed.