Saturn's premature launch which left developers, publishers and retailers severely pised off.

Port all Xbox exclusives to Win10.

Haha. I know, right?

This is certainly a competitor for the top spot. 599$ is up there too.

MS handling of their PC game franchises.
I used to be an avid pc gamer, my pc upgrades / new buys linked to new versions of MS flight simulator. With Xbox MS lost all interest in PC gaming and so went mine. Then MS put the final nail in the coffin by trying to turn my favorite franchises into ftp / games as a service with MS flight and AoE online. That wasn't just limited to MS though, Sim city and Diablo got similar fates, HL2 ep3 never showed up, Spore disappointed.

Wii U, the name.

PSP/Vita has had some pretty "what were they thinking?" ads. That stupid squirrel ad or that unintentionally racists billboard.
The biggest blunder in recent memory had to have been the Xbox One's announcement.
Given how much gamers like to bitch and fight amongst eachother, it speaks volumes to how badly they cocked up that all of the gaming world was unified in their disapproval of Microsoft's initial vision for the Xbone.
I honestly think they're still paying for it today. Xbox One sales lag way behind the PS4, in my opinion, because the mental seed of MS being the evil ones and Sony as the cool guys who are like "just let gamin' be gamin' yo!" planted waaay back in E3 2013 are still resulting in people choosing Playstation over Xbox, even if they don't know it.
That really was a colossal misjudgement on Microsoft's part.

Practically every decision Warner made regarding Atari from 1980-1984. Printing more copies of Pac-Man than there were 2600 systems, E.T. in six weeks,the huge flood of third party 2600 shovelware and pornographic games that Atari couldn't curate, the design of the 5200 controller, you name it. Jack Tramiel didn't make the best decisions for Atari, either, but Atari was pretty crippled already when he got his hands on them.

I would say that announcing the Scorpio after showing the Xbox One S was a much worse business decision.   

All of this. Also 599 USD! 599 USD! 599 USD! 599 USD! Oh those were the days.