On Monday, the company plans to announce that it will begin consumer tests of Xbox Live this summer with a one-year subscription and a headset, for $49, that will enable Xbox owners with high-speed Internet connections to compete and converse with one another online. Despite speculation that the company might use its online network connection to link Xbox users to Microsoft's other services, Mr. Allard insists that Xbox Live will stay focused on gaming.

Robert J. Bach, a Microsoft senior vice president in charge of its games division said the company was planning a service that he compared to Disneyland for its safe, wholesome environment -- in contrast to the "Coney Island" he said that the open Internet can sometimes become. "Compare Coney Island to Disneyland," he said. "When you're at Disneyland, there's no trash, no violence and you never see security. That's what we have in mind."