The answer is simple: Microsoft needs its own Steve Jobs, not a Steve Ballmer.
Without an absolute tyrant with a keen sense of where the market is, and where it's going at the helm, Microsoft will continue to flounder. And with good reason, there are too many internal fiefdoms, and too many internal rivalries.
To be honest, I think MS would've been very well served to have been broken up at the end of the 90s. If the company had been divided into three separate firms, like Office Inc., Windows Inc. and Everything Else Inc., I think things would've turned out very differently for those firms over the past ten years: fewer boondoggle projects that only have a prayer of making a profit in the distant future, less of a whackjob 'better together' mentality that hamstrings Microsoft developers into using inadequate internal solutions or forces them to bolt useless features onto their products, and so on.
Sigh, sorry. I really think Microsoft is capable of so much more than they've been able to do for years, and it frustrates me to see so much talent go to waste.