People often make the assumption that Microsoft is a software company, but anyone who has ever used their software should question that because they're not particularly good at creating software. You may now be wondering why they're such a successful company (and why they sold so much software) if they're not a software company ... The fact of the matter is Microsoft has always been a service company, and if you talk to large companies they will tell you that the main reasons they buy software from Microsoft is that they provide the best training, quality support, and are the standard (which makes it easy to find employees).
As more and more devices become more powerful and can connect to the internet the PC becomes less and less important as a device to deliver services to people. The XBox 360 and Zune are really more about developing products so that Microsoft is in a position to deliver new services to people as they become more popular.
