It seems pretty clear that Microsoft's problem isn't with their ability to innovate. It's in their complete inability to get to market quickly, take risks and work together. And that is directly related to their HR policies in particular their ranking system.
Not sure why you were downvoted. Upvoted even though I don't particularly agree. Having lived in Seattle for a couple of years, and knowing many Microsoft employees during that time, my outsider's view is that MS's consumer-side failures are largely geographical and cultural. Redmond, or even Bellevue, is extremely isolated from Seattle, which in and of itself is not exactly deeply intertwined with the cultural cente…
I guess one way to look at it is Microsoft is a good counterweight to the argument you should eat your own dogfood. You should, but you should not do so exclusively.