Apple appears to be preparing an all-out assault on the handheld gaming market, moving to snap up gaming industry insiders from Microsoft to go with its growing team of graphics-chip specialists.

News that Apple has poached Richard Teversham from Microsoft's Xbox business this week is only the latest sign Apple has gotten serious about the gaming business. Teversham, who was senior director for insights and strategy at Microsoft's Xbox Business, drove the "three year strategy for the Xbox business" in Europe, the Middle East and Asia, according to his LinkedIn profile.

Earlier this week Apple ( AAPL - news - people ) hired Bob Drebin, chief technologist at Advanced Micro Device's graphics group and the creator of the Nintendo ( NTDOY.PK - news - people ) Gamecube's graphics processor.

That move came as IBM ( IBM - news - people ) chip designer Mark Papermaster began his role as head of Apple's iPod business last month after a long legal tussle with IBM.

Apple is also putting some of its huge pile of cash into semiconductor technology. In December, Apple purchased 3.6% of U.K.-based ImagInation, licensing its PowerVR graphics technology. And last year Apple purchased processor designer PA Semi for $378 million (See "Apple Buys Chip Designer ").

Where will those investments be put to work? Apple Chief Executive Steve Jobs said in an interview last year that he plans to put his PA Semi designers to work building silicon for the company's iPhones and iPods. And while Apple keeps its hardware roadmap to itself, iPhone developers such as Damon Allison figure the iPhone and iPod's hardware will evolve in at least three areas.

First, the iPhone will almost certainly get a better camera and multi-media capabilities. That could unleash a new generation of applications that integrate video and still images into games and social applications, as Nintendo's new DSi has done.

Second, sooner or later the iPhone and iPod touch will get a new, faster processor, most likely an ARM-based design customized by Apple's in-house designers. The result will be snappier, better looking games.

Third, Apple will experiment with new form factors, launching a netbook or tablet computer that may use the same software that powers the iPhone and iPod touch. Such a device might be a terrible phone--it's hard to imagine shoving a 10-inch screen in your pocket--but it could be an ideal platform for games and social networking.

Of course, guessing what Apple will do next is a tricky business. The problem with Apple is that while it appears to plan long-term--keeping projects such as its 2005 shift to Intel ( INTC - news - people ) processors under wraps for years-- it says very little about even its short-term plans.

However, talk to a few of the thousands of developers who have flocked to build software for Apple's iPhone since last year and they'll say that Apple's instructions have always been very clear: Build your applications so that they're compatible with different screen resolutions and screen sizes.

"Apple has told us from the beginning to be sure to write our new software in a way that will accommodate different resolutions and screen sizes," Tapulus Chief Executive Bart Decrem says.

Translation: Today's iPhone applications will be appearing on bigger, sharper displays sometime in the future.

And those developers are building applications that are wildly different from the quick and casual games that have appeared on mobile phones in the past.

That's in part because of the device's lack of buttons. Neil Young, chief executive of gaming startup Ngcomo, is betting that the iPhone's touch screen can handle more complex, fast-moving games than are found on today's mobile phones or handheld gaming consoles possible. "You've got a lot more fine control," Young says. "It is a very precise interface."

So he's betting big on a pair of games based on genres that have had mediocre success, at best, on small gaming devices. "Live Fire," slated for later this year, is a fast-moving shoot 'em up. Then there's "Star Defense," a real-time strategy game where players protect a planet from swarming invaders.

Such games are certainly a preview of what's to come as developers continue to explore the iPhone's possibilities. They might also be the best hint at where Apple's hardware could go next.

Mobile app analytics start-up Flurry is building a business helping iPhone developers get "discovered" in Apple's App Store. Its tips for developers range from promoting other apps within an app to getting as many users as possible to rate and review an app. (See "Making iPhone Apps Pay.")

If those tactics don't work, there are always other tricks. One involves inserting popular keywords into the product descriptions included in every App Store listing. A developer could write that Britney Spears was an inspiration for his app, for instance, or posit that his game is "just as fun" as top-selling game "Tap Tap Revenge." Think of it as search engine optimization for the App Store.

One example: a new game called Crazy Hotdogs that asks players to grill and sell hot dogs for a crowd of exacting, impatient customers. In the game's App Store product description, publisher Com2uS posits that fans of other time management and point-and-tap games such as Bejeweled, Diner Dash, Sally's Salon and Chocolate Shop Frenzy will like Crazy Hotdogs.

The upshot? When people search for Bejeweled or Diner Dash, both of which rank in the App Store's top 100 paid games and were created by other publishers, Crazy Hotdogs may pop up, too.

Peter Farago, Flurry's vice president of marketing, says the firm hasn't measured the strategy's success, but believes it's effective since most consumers rely on the App Store's search function to find apps. Farago adds, "By smartly picking keywords, a developer can get his product discovered more easily."

'Gears Of War' Creator On Gaming's Future

Epic Games' Cliff Bleszinski chats about his inspirations and innovations.

A chainsaw revs. The heavily armored Marcus Fenix lumbers forward, ripping through a Locust soldier as if he were shredding turkey with an electric carving knife. The combination assault rifle and mechanized saw blade, known as a Lancer, is one of the most recognizable components of "Gears of War," the Xbox 360 shooter that asks players to save humanity from an alien horde.

The most recognizable man behind the franchise happens to be Cliff Bleszinski. The 33-year-old design director of Epic Games has cultivated a rock star aura, despite the videogame industry's general lack of celebrity. He started out in the business when he was 17. Now he is in charge of one of the largest franchises on Microsoft's (nasdaq: MSFT - news - people ) console. "Gears of War 2," his latest title, launched in early November and sold 2 million copies its opening weekend. The game is expected to be one of the best-selling games this holiday season. 

Bleszinski, who recently unleashed a new pack of multiplayer maps for "Gears 2" over Xbox Live, talked to Forbes.com about the impact downloadable content has on games, making hardcore shooters appeal to casual audiences and his love for "Super Mario Brothers."

Forbes.com: What game inspired you to make games?

Cliff Bleszinski: The first game I ever played was "Space Invaders" on the Atari 2600. I was instantly hooked by the idea of manipulating images on my television screen but wasn't quite old enough or aware that this could be a possible career. The title that inspired me the most would have to be the original "Super Mario Brothers" on the Nintendo Entertainment System. There was something about these cartoony worlds that unfolded before me that were filled with secrets that, at the time, I believed were not meant to be discovered by the designers.

What is the defining moment of your career, so far?

I'd have to say presenting the original "Gears of War" at the Electronic Entertainment Expo in 2006 to a crowd that was incredibly impressed is right at the top of the list. I hope that there are many more exciting moments like that in store.