Actually, if you look at Microsoft's history, their successes have always been "Take someone else's product and outmarket them." They bought the components for MS Office from other developers, they took the idea for Windows from other developers, and they took the Win95 interface from their "partnership" with IBM. When competition with established platforms and equal resources came around, MS was clueless on what to do.
Around 2000-2001 or so, Apple came on the scene with the iPod, and MS didn't know what to make of it, so it was dismissed. Digital music players were around before then, but they were more "geek oddities". Then Apple came up with a cloud based music service full of highly desirable content, and the iPod was the tool to access it. Again, Microsoft went "Huh. Oh well."
Apple's success with the iPod led to ideas about combining a phone with music players (leading to the disastrous Motorola ROKR). Microsoft began to notice the cloud/device potential around this time, but still didn't sink too much thought into it.
Jobs got pissed at Moto's pathetic ROKR phone (it held 100 songs and had an interface designed by Satan to torture souls), so he had Apple begin development of a mini computer phone. Microsoft said "We've had Windows CE phones out for years. Only business men use them."
The iPhone was a runaway success, and it interfaced with iTunes service that had already been established, leading to expansion opportunities with the iPad, PC's, movie content, app development, and more.
Google saw the potential of cloud content tied to consumption devices right around the time the iPhone was introduced, so they purchased a promising developer's OS (Android), build a similar cloud based store around it, and changed it up from Apple by making the OS available to any manufacturer that wanted it. This was attractive to phone manufacturers because 1) Custom phone OSs are expensive to create and often buggy, and 2) It gave everyone a way to compete with Apple.
Microsoft CE products died a quick death shortly after this happened. MS tried to jazz CE up with CE 6.1, custom skins, and so on, but it was still a complicated mess. They wanted to change their image, so the whole OS was renamed to "Windows Mobile" with version 7. A huge push to recreate the environment of ITunes and the Google Store was underway---but by then it was too late. Two big fish ate all the customers, and MS was left with the scraps. They put a lot of development into their Zune and Windows Phone line, and they were very nice, but one bad decision after another and the fact they weren't able to buy any pre-existing technology to outmarket the competition left MS out in the cold.
To this day, MS has no idea how to handle not being number one. That's why you see all of the floundering and desperate ideas coming out of Redmond. the new Windows phones are fantastic, but owning one is like owning a Zune- uncool. Windows tablets are really nice, but for the same price you can get a tablet that does a lot more. Windows OS is a great desktop OS, but desktop PCs are dying due to tablets and microdevices.
Honestly, I'm not sure MS can be saved at this point. They may become like IBM someday: specialized solutions for businesses, but pull out of the residential market. It's sad too, because they had every advantage, but didn't have the vision to use it.
Sorry for the rambling