Spending $300m on an ad campaign to inspire consumers to reconnect with Microsoft not only feels desperate, but seems such a waste when it could have been channeled into making better products or hiring better hackers.
With the cash they have on hand, I have never understood why they aren't doing more parallel development in smaller groups to let the good ideas happen organically. They continue to try to fit every new product into the existing Microsoft ecosystem -- something that is beginning to fail.
As companies get both bigger and older, internal politics seem to have a larger impact on company policy. There are surely many Microsoft employees who have a vested interest in keeping things exactly how they are, investing money and resources in existing projects that maintain or expand their power base, regardless of the benefit or lack-thereof to the company as a whole. It's a type of corporate inertia that's difficult to overcome once in place.
it has failed. big time, too. do you want a Zune? ;-)