I guess that's why microsoft basically bought the technology & idea for Kinect from the Israeli developer PrimeSense. I wouldn't exactly call that internal r&d.

Except, again, they didn't do most of those things first. For example, unless you define "true portable gaming device" in an exceedingly peculiar way, Milton Bradley were the first with the Microvision a decade before the GameBoy. Nintendo themselves were only a few years behind MB with their Game & Watch line. At any rate, I don't take issue with you calling Nintendo the most innovative gaming company, as they very probably are, but your original post said they made the first this and the first that when they in fact did not.

Ballmer said that Microsoft has been a number of years too late to market with stuff for a reason.  They don't get first to market with about anything at all.  They take what is established, looks promising and then piles on.  Because of this, Microsoft is late to the cell phone market, and anything that Apple got into.  They were slow to the Web browser market, web search, and more.  Doesn't matter if they spend a lot on research, they just don't come to market first with much of anything, thus Ballmer went into talking about how Microsoft has been too slow.

http://brooksreview.net/2011/05/ballmer/

That is on Ballmer and Microsoft being slow to the market.  So, of course with all their said R&D they can respond with something.  Note the word RESPOND.

In regards to innovation, maybe you give Microsoft the harddrive in their console and achievements.  Windows 8 looks possibly something they are working on new.  But you are seriously going to say that Kinect DEFINED any market at all?  Kinect is a follow up based upon the work Nintendo did wih the Wii.

If you want to talk unintended irony, based on what I didn't know was reported. Forbes named Ballmer the worst CEO of a company traded publically:
http://www.tomshardware.com/news/Forbes-Steve-Ballmer-CEO-Top-10-Fired,15637.html

So, if this continues, there may end up being an execution of Ballmer of some sort.

Ha ha! Best answer - Zombie Ballmer!

and then Apple brings back 'Jobs the Lych King.'

(RIP Steve)

Microsoft is responsible for many of the software innovations we've seen in console while Nintendo is responsible for many of the hardware ones.

Kinect may have started as a response to the Wii but there are people at Microsoft that recognized the potential for the device and have taken it from just being just a gimmick to a technology that will forever change computer-human interaction in countless applications. 

Kinect in being used by researchers developing the next generation of robots.  It's being used by doctors in the operating room for hands free control of medical hardware (not only does it make it easier for doctors but safer for patients by reducing the chances of bacterial infection which kills many thousands of people a year).  Microsoft is working with the Sesame Workshop as pioneers in the future of interactive education television and it's being done using Kinect.  I could continue giving examples but the point has been made.

So in my opinion trying to pigeonhole and discount this technology as simply a gimmick for one or even two generations of Microsoft video game consoles is ridiculous.

Microsoft has almost 600 patents related to Kinect.  You're saying they didn't do any R&D to get those patents?  As for the licensing of technology the Wii/PS3/360 and countless other hardware all license patents from other companies.  Sometimes is makes more sense to license someone else's solution rather than trying to come up with a your own.   There's always the risk of spending a lot more money in research or getting sued and still having to license the patent in the end.

The playstation move was in development before the Wii was even announced, and the Eye toy (kinect-like motion controls) was out in 2003. They definitely didn't introduce motion controls, nor did they introduce touch screens or analog sticks.

No, keep Ballmer. At least he's somewhat human (laughs at himself, admits mistakes). Kill off that android thing that they call Don Mattrick.