One of Microsoft's biggest problems that contributes to their insular view is that they are located in Redmond. They're insulated from the rest of the highly competitive technology field (except for Amazon). This works out great for them when it comes to retaining talent in Redmond as employees are usually not willing to uproot their lifestyle to head to 'greener pastures'. Contrast this to how Google handles compens…
I'm not going to claim that Microsoft isn't too insular (it is) and I live and work in Seattle on purpose, so I'm a little biased about this, but I don't think it's just about the location. Besides Amazon being a huge presence, more and more established tech companies are opening development offices here (Google, Facebook, Zynga) just to take advantage of the talent that's here. Not to mention the fairly healthy star…
Even though large technology companies are opening offices, like you mentioned, the difference are that these are satellite offices. Your career potential will be limited, its just an unavoidable fact of the current corporate world. Its a very different scenario to move from the center of the solar system to Pluto.
A self feeding startup culture is not a healthy startup culture, at least imo.