This isn't entirely fair. Ten years ago Microsoft was just getting into the video game business, now they essentially own it (though they definitely fumbled the XBox One rollout). Ten years ago Azure didn't exist, now it's a $1bn/year business and a credible threat to AWS. In both these cases Microsoft started out with weak initial offerings and refined them into something people found compelling. There are other markets where this approach has not yet yielded fruit for them (mobile, tablet, search), but it's not really true that it just never works.
> Microsoft hasn't been that good at genuine market innovation (we're talking revolutions)
Microsoft has never been about revolutionary innovation. MS-DOS was just a rebadged version of Tim Paterson's QDOS. MacOS was the first OS to bring GUIs to the mass market, not Windows. IE came after Netscape. Etc.
Since the beginning of the business their approach has been to be a "fast follower" -- to let other companies take the huge risks of pioneering a new market, and then, if that market proves out, swoop in with a product of their own. Generally speaking this has worked out really, really well for them. Letting someone else do the pioneering isn't particularly heroic, but then, as the saying goes, you can always tell the pioneers because they're the ones with the arrows in their back.
Not that I disagree with your point, but I think it's worth mentioning that VGCharts is not a very reliable source for sales data. It's essentially made up, using sources such as guessing, and talking to store employees to estimate their sales at that location and massively extrapolating.[1][2]
Microsoft owns the video game business? They have a small fraction of the whole pie. They don't own anything. Their Xbox One screw-up and their embarrassing about-face showed how truly tenuous their position is.
Android, iOS, free to play, Facebook / web platforms, Ouya and the coming onslaught of embedded video game technology into TV's and other solo Android machines, Valve's console entry, Steam, Nintendo, Sony; publishers like Activision etc; indie producers like Mojang etc; and on and on and on and on. Microsoft is just one big player in a very large market.
Microsoft is in a position of weakness in gaming. If the Xbox One doesn't sell on par with the PlayStation 4, or if it doesn't sell in volumes at least on par with the 360, they're going to very quickly find themselves on the outside looking in just like in mobile (lackluster sales will also take down the Kinect platform).
> Ten years ago Microsoft was just getting into the video game business, now they essentially own it
Sony and Nintendo might disagree. Nintendo kicked serious butt for most of the last generation. Sony has been doing well, at least matching MS, in the last part of the last generation. The next generation still hasn't started much, though Nintendo definitely messed up on its start. It remains to be seen if there is much of a console market left; the winners of this generation just may very well be Apple and to a lesser extent, Google.
That $1B nummer includes software sales to Amazon, Rackspace etc so it's not really comparable to Amazon (which also lumps AWS together with other stuff).
Generally though I find it interesting that there is almost no mention of it either here on HN or other places. When AWS has an outage, everyone notice because lots of high profile sites and services go down. Azure has had a few outages and we've barely heard about it.
I think the difference now in the new markets is that Microsoft has talented competitors, including Google which has copied the strategy you mention with the twist if giving their software away for free.
And it's almost funny--they've been hamstrung by being too far ahead of the pack in some ways. Look at all the trouble they had when they built Windows on top of the IE engine. In a way, that's one of the first steps towards a real use for the "cloud"--what should be different about browsing for a file on your computer and browsing the internet? And that ended up causing them some serious money.
They flubbed their early efforts at mobile OS development also. They had a real chance to corner the market before Apple was even making iPods, I believe. But they got too focused on beating Blackberry and didn't really look past them (in my opinion--I'm no expert).
Then the tablet: Microsoft was one of the first to really push tablet computers. Unfortunately, the technology wasn't there to support the idea. So they shelved it for awhile, then Apple came along ~10 years later and did it "right". And now Microsoft is trying to play catch up to a field where they did a decent amount of the early work.
> Look at all the trouble they had when they built Windows on top of the IE engine.
They didn't build windows on top of IE. They showhorned IE in as a technical solution to a legal problem (How to abuse their monopoly without it being patently obvious to everyone). Just to be clear - At the time, IE4 was way better than Netscape4 - but it only became popular when it was available by default. And it was a successful solution, on all accounts - they killed netscape, they won the web (for a while), and they paid very little in damages eventually.
> Then the tablet: Microsoft was one of the first to really push tablet computers. Unfortunately, the technology wasn't there to support the idea.
The technology WAS there, but Microsoft's UI wasn't - they continuously tried (and failed) to make a desktop-OS touch-usable. I've never used one myself, but everyone I know who had a Newton said it was "just right". And the palm pilot worked very well too.
People underestimate what apple have done with the iphone and tablets - they've figured out the UI/UX. Hardware is an important, but lesser part of this equation. Microsoft, for 10 years, couldn't figure out that there even was a UI/UX problem.
> I've never used one myself, but everyone I know who had a Newton said it was "just right".
Interestingly, a big part of the Newton's failure (along with the terrible v1 handwriting recognition, which was largely fixed later, and Apple's strained finances) was that they went for a complete break with the past; there was basically no developer familiarity. iOS was probably a sweet spot; new, purpose-designed interface bearing very little resemblance to MacOS beyond font choices, but almost the same under the hood.
The technology was there, several years before the iPad I had a PC with a capacitive touchscreen.
What Microsoft lacked was the insight to realize that just cramming a touchscreen and stylus on Windows XP wouldn't work.
Apple, perhaps with the hindsight of the Newton, realized that creating a completely new GUI optimized for finger touch was the way to go (or rather their experiments stemming from multi-touch trackpads showed them that it was _a_ way to go).
> They had a real chance to corner the market before Apple was even making iPods, I believe
They were so very, very insistent on "it has to be Windows!" which lead to the notoriously dreadful Windows CE/Mobile interface. This goes on to an extent, but now more as a confusing marketing thing; Windows Phone does not seem like a good name for a phone that doesn't have windows as a concept.
They clearly think they own the market too despite the fierce competition from Sony and Nintendo, because the Xbox platform is now clearly about benefiting themselves and rather than selling a product to their customers. Hence the emphasis on things like digital sales with heavy DRM (although now that's gone, its an important point that they completely thought they would get away with that), Television, Kinect, Excessive amounts of Advertising, etc.
What's sad is how at E3 the best thing for a lot of the gamers was how they weren't going to get screwed by heavy DRM from Sony.
> Microsoft hasn't been that good at genuine market innovation (we're talking revolutions)
Microsoft has never been about revolutionary innovation. MS-DOS was just a rebadged version of Tim Paterson's QDOS. MacOS was the first OS to bring GUIs to the mass market, not Windows. IE came after Netscape. Etc.
Since the beginning of the business their approach has been to be a "fast follower" -- to let other companies take the huge risks of pioneering a new market, and then, if that market proves out, swoop in with a product of their own. Generally speaking this has worked out really, really well for them. Letting someone else do the pioneering isn't particularly heroic, but then, as the saying goes, you can always tell the pioneers because they're the ones with the arrows in their back.