It sounds like not being very good at this was their problem, which they realised.
My personal theory is that you can sometimes build profitable products, without being the customer, but you can't build great ones.
Microsoft and Apple seem to be two excellent examples. Apple's customer is Steve Jobs.
To be honest I am mostly interested in making a profit.
Edit: If you're trying to give Microsoft as an example of a company that fails to make great products because it fails to use them, think again: http://www.fastcompany.com/magazine/62/microsoft.html It seems more likely that they just suck.
They may use them internally, but I think a lot of their work is focussed on external users.