Article makes a good point. Microsoft is a colossal monster that, while not as fierce as it once was back in the age of the browser wars, still no beast to be taken lightly.
I'm reminded of pg's article about "Microsoft is Dead" (http://paulgraham.com/microsoft.html). While pg makes many good points and it is undoubtedly true that Microsoft isn't something that companies cower in fear of anymore, they are still alive and still moving forward at impressive speed. The beast may be dead, but the animal still lives. I don't believe Microsoft will be going away anytime soon. Maybe in my lifetime they'll eventually truly become a dwarf company and eventually burn out (I'm 18), but that happening soon I just can't believe is likely.
Look at the Xbox. They pretty much said "hey, we'd like to make video games", and a few years later are a major major player in the market (before the Wii, it looked as if the game was just Microsoft and Sony, and Sega and Nintendo were looking like also-rans.) Similarly, think of IE, and the amazing market share it has (its fading a bit, but there was a while when it looked as if Microsoft didn't care about IE at all...)
Its one thing to say "gosh, Microsoft has sucked at this internet thing", but another to say that they're not in the game. Microsoft has proven again and again that they can say "hey, we want to win" and they take the market by storm.
It's because the gaming world is an incredibly divided and not-exactly-smart one. When it was Sony versus Nintendo, there was just an absolute wreck. Nintendo was incredibly closed about their system, and they focused on less mature gaming titles. Sony took everybody in, and that worked last generation. However, they never really had a vision. Microsoft made a smart decision, and turned the XBox into a media center. A lot of people got the XBox in liu of a DVD player. The 360 expanded on that a lot, and it really had a vision: when it entered alongside the GameCube, it crushed, because the GameCube had nothing to offer outside its niche. I think it's safe to say that: I was a GameCube owner, and I was happy for Viewtiful Joe and Melee, but it was incredibly weak as a competitor.
In this generation, Sony showed that it had no idea of what made their original product good: the PlayStation 2 was cheaper than its competitors, and as such was able to amass a huge gaming library. Microsoft and Nintendo both had visions. Microsoft focused on online gaming, and Nintendo focused on casual gaming. They both succeeded. Sony assumed the competition was about making the prettiest box, no matter the cost. They made a system that was a luxury item: the other two made consumer products. Sony's paying for it now.
I think that in a way, you could say that Microsoft basically used the same strategy they've always used. They made something to appeal to the everyday user - though in this case, "everyday user" meant "everyday gamer" rather than expanding to the casual markets - and they profited. I think that Sony could have easily stopped Microsoft, and made the XBox the last-place console, but they messed up in a big way. Nintendo took the lead in droves - I think it's safe to say they've gutted the two other companies, considering there's still a shortage of Wiis - and Sony went from first to last. Microsoft took over in the vacuum that got created.
That's all well and good but if the Xbox was its own entity it would have been closed down years ago, I don't think the division is yet profitable.
What they are doing is using the profitability of Windows/Office to buy market share in other segments. Sometimes it is successful (IE/Sharepoint) other times not so much (Zune).
Doesn't matter if it is profitable for the last leg of a console cycle (almost all consoles are). It matters if they can make the 360 profitable overall.
There's all kinds of Windows Mobile phones that have iPod-esque features. However, the device makers don't want use the Zune branding, because they want to use their own branding.
But there's a difference between having a phone that CAN play music, and a phone that's designed to make listening to music enjoyable.
My current phone has a music player. I would never use it. I would take a crappy unknown MP3 player to my phone's music player. It's awful. And a part of what makes it awful is that I don't intuitively know how to make it play music.
Compare that to the iPhone. Microsoft might try to make a competing phone. Right now, they've got nothing.
I'm reminded of pg's article about "Microsoft is Dead" (http://paulgraham.com/microsoft.html). While pg makes many good points and it is undoubtedly true that Microsoft isn't something that companies cower in fear of anymore, they are still alive and still moving forward at impressive speed. The beast may be dead, but the animal still lives. I don't believe Microsoft will be going away anytime soon. Maybe in my lifetime they'll eventually truly become a dwarf company and eventually burn out (I'm 18), but that happening soon I just can't believe is likely.