Microsoft didn't wait to show off the big guns, beginning the show with Gears of War. Cliff Bleszinski introduces himself and the first level. The interesting camera accentuates the heavy action and unbelievable gore. Peter Moore is then introduced to take over as he would for the majority of the conference.

He begins by dispelling shortage rumors, and five million consoles will be sold by next month. They're ramping up production, and the console has achieved these numbers faster than Xbox and PS2 at this point. It's even beating the iPod, and games and accessories sell more per console than any other platform.

Three things have been done since the 360 launched, he says. These include HD gaming, friends over Xbox Live, and linking media. Xbox Live innovations have changed how we played, and they'll have six million members by next years E3. Fifty-seven percent of 360 users are on Live, and the Live Arcade is a big reason. A montage of Live Arcade releases follows:

Pac-Man
Contra
Super Contra
Frogger
Galaga
Sonic
Defender
Street Fighter II Hyper Fighting
Ultimate Mortal Kombat 3
Time Pilot
Scramble

Moore then announces more like Namco's Ms. Pac-Man, Dig Dug and Rally X. Konami will have Frogger, Super Contra, Track & Field, Time Pilot, and Scramble. He confirms the Konami code will work on Contra. He also says Midway will have Root Beer Tapper.

One hundred developers are currently signed on for the Arcade. He makes the announcement of Lumines Live for the Live Arcade with all standard Live features. This leads to a second montage:

Lost Planet
Rockstar Games Presents Table Tennis
Brothers in Arms: Hell's Highway
Mass Effect
NHL 2K7
F.E.A.R.
Too Human
Viva Piņata
Moto GP 06
Lord of the Rings Battle for Middle Earth
Sonic The Hedgehog
Madden 07
Saint's Row
Smackdown vs. Raw 2007
John Woo Presents Stranglehold
Test Drive Unlimited
NCAA Football 07
Dead Rising
DDR
Timeshift
Superman Returns
NBA 2K7
Ninety-nine Nights
Gears of War

Moore comes back to applause and says Pro Evolution Soccer will debut on 360. He states depth of titles are important, and that leads into a Fable 2 trailer. Peter Molyneux given applause again as he moves into Forza Motorsport 2 which promises more customization. They make note that this will be a franchise they'll push. The game will feature 300 cars, the ability to tune and paint as you wish, 12 players online, and it's all releasing this holiday season.

Moore also announces three new accessories, including a wireless, force feedback steering wheel, a new wireless headset, and the Xbox Live Vision camera. The latter will allow the player to customize their Xbox Live Gamertag, or their characters in games like Rainbow Six: Las Vegas. These are all due for a fall release.

Blue Dragon is shown, and this is a lead in to discuss the content for the Japanese market. He mentions Dead or Alive Extreme 2, and that trailer will be up later this week on Live Marketplace. He briefly runs down the Tom Clancy game series and its accomplishments. This is done to lead into the Splinter Cell Double Agent trailer, a game due in September.