The iPhone basically erased the market for standalone music players, which forced Microsoft to abandon the Zune and start catching up on the Windows Phone.
But to your point, Microsoft tends to play "me too" when trying to compete with other technology companies which results in a lot of less-than-polished and sometimes abandoned products and services.
Microsoft's old strategy of surround, starve, and destroy doesn't seem to be working against more aggressive competitors like Apple, Google and even Amazon.
Azure could be a decent server platform, but until Microsoft's intentions for that platform are made more clear, as right now with Ballmer in charge, nothing other than Windows, Windows, Windows is ever a sure thing.
Consider Microsoft's strategy to build the Surface and compete directly with the OEMs they sell through.
It's often hard to tell the difference between being a good friend of Microsoft and their worst enemy.
"Helping businesses move to the cloud is one of our largest opportunities. All the online services people use today — both from Microsoft and other companies — run on servers in datacenters around the globe. The volume of Internet services used will continue to grow as people connect to the Internet from more devices for more purposes — fueling incredible opportunity in our server business. Unique to Microsoft, we continue to design and deliver world-class cloud solutions that allow our customers to move to the cloud on their terms. For example, a company can choose to deploy Office or Microsoft Dynamics on premises, as a cloud service or a combination of both. With Windows Server 2012, Windows Azure and System Center infrastructure, businesses can deploy applications in their own datacenter, a partner's datacenter or in Microsoft's datacenter with common security, management and administration across all environments, with ultimate flexibility and scale. Our business customers tell us these capabilities are critical to harnessing the power of the cloud so they can reach new levels of efficiency and tap new areas of growth."
If their intention is to try and capture the Windows Server hosting market, then it's a risky bet. They risk alienating large Windows OEMs like Dell and HP that would be cut out of arrangements like this when customers start buying server services from Microsoft directly.
This is all well and good if you're a company using the Microsoft stack, but it doesn't mean they're as committed to making a platform-agnostic hosting platform like Amazon is with AWS or other big vendors like Rackspace are.
>Microsoft can abandon anything that's not core to their survival, and right now that's Windows
First, Microsoft has three major divisions bringing in somewhat equal amounts of revenue, Windows, Office and Server & Tools.
Second, if you apply the same metric to other companies, it would be foolish to use OS X, Gmail, Docs. App Engine. Android, and perhaps even Azure.
Third, Microsoft could've competed by making a better Zune, perhaps, but it's not the same thing as the iPad killing Silverlight, because that was done by not supporting plugins. Tablets are slowly overtaking PCs in sales, what sense does it make to push new versions of a plugin that will never run on most of them?
The transitions have mostly been smooth, VB apps still run on Windows. Hell, a game bundled with the Windows 95 CD still runs unchanged on a Windows 8 machine.
Google App Engine is a risky bet for the same reason as Azure, and perhaps even more so. Google could decide tomorrow that it's not worth supporting and tank it, or change the pricing model to make it no longer cost effective.
I don't think the same thing can be said for Amazon's AWS or other infrastructure providers like RackSpace where that would be as much as going out of business.
I'm not saying Microsoft doesn't take care of Windows, if anything they support it too much, but anything that's not Windows is just one executive decision away from being shut down.
XBox runs on Azure from what I hear. Its not getting shut down anytime soon. In fact, if I were a betting man, I'd even go as far as to say that Azure is the future of Windows Server.
Microsoft can abandon anything that's not core to their survival, and right now that's Windows.