I have to disagree for the most part. What do you expect MS to be? The internet grew so fast and became bigger and bigger that it was just too much to handle for one single company. Do you expect MS to own the internet all by themselves?
A lot of .com companies came up with more than 100k employees combined. Think about google, ebay, amazon, yahoo etc. All of them appeared in a very short timeframe. You can't expect one comapny to expand on all these markets equally while keep on running your own business.
I think MS is doing pretty well on the web.
Their browser is still the no.1 browser in the world,
their Messenger (Windows Live) is one of the most used instant messenger or maybe even the most used instant messenger in the world.
their search engine is currently the no. 3 in the world and gained market every month since launch.
Xbox Live is growing very fast, 23 million members and growing (probably 14 of them paying $50 a year!)
there is no other company that handles so many email accounts in the world (hotmail etc).
Despite that, MS is still a software company. They have two hardware products on the market. One is the Zune and one is the Xbox 360. One of the two is a great success.
MS has a lot of things going on like surface or courier that look simply fantastic, but the market is just not ready for this. I think it was pretty smart to let HP develop the slate and to create the software. Maybe this turns out to be the right way after a lot of people realise that people are not interested in tablets 
who knows.
Imagine not having GamePass on your console...
