While I partially agree with what you've said, I wouldn't really write off Microsoft's success as their remarkable ability to market their products. That's Apple's biggest strength, not Microsoft's. Microsoft is much better at arm-twisting, big promises, risk-management (as in - we'll do it even if it's shady, even if it may affect our image, as long as the fines are lower than the profit) and throwing its weight around.

As for innovation, judging by my substantial experience working with various Microsoft-owned departments and Microsoft-centric developers, it's nowhere to be found. Microsoft has that flair to stifle creativity and out-of-the-box thinking like no other company I know of. Now, I can't purely blame that on Microsoft, maybe people who like to `get it done and get over with it`, without thinking much what can be improved, are automatically drawn to Microsoft and their philosophy of computing and doing business, but I have never seen so much framed-in, almost phlegmatic, developers as the ones that are Microsoft-centric. They don't even care about the code they write, they don't even care about future expandability, theirs is just to type it in as a bunch of monkeys on typewriters and move on - non Microsoft-centric developers usually consider programming as a form of art (count me in! ), as a mean of creative expression. Such approach, however, grants high productivity, so it's not without merit to business owners, and it comes as no surprise that Microsoft solutions sell - but it comes with a huge cost of severely limited ability to innovate and look-ahead. They will never be able to write all the Shakespearean works despite the popular belief - millions of monkeys typing on a million typewriters cannot produce all the works of William Shakespeare, Facebook is the obvious example of that.