Re: staying ahead
I agree with Steve, there was a period of time where MS played the Oracle game, long before Oracle used it to get where they are now.
Anything that had any (MS) perceived potential got bought out. Any patents/technology from it they thought would add to their existing products they used, but the "brand" of the startup was gone. Whether that caused the internal stagnation of innovation or was a symptom of it, I'll leave you to decide.
But this whole tablet/smartphone thing, who could really see that coming? If you would have told me back then people would willingly shell out $50 a month on data plans for these tiny screens, I'd have thought you were crazy. Shows what I know about people.
Apple had very little to lose when they entered this market, their Mac's were a niche and still are. Google/Android had very little to lose, they could also take risks you could see a mature, profitable company like MS saying "Ummm, no" to. Also keep in mind MS was very preoccupied with Xbox and Zune (iPod competition) during the period leading up to tablet/smartphone explosion. In phones, they were aiming at Blackberry back then, which seems humorous now.