By 2005/2006, when I was looking at corporate culture at MS, things had changed: with the advent of pair programming and agile methods, many designers and developers are more effective in shared spaces -- and many prefer those environments. NOT cubicle farms, which are the worst of all world, and NOT large badly-designed open-spaces ... but there are plenty of other good options.
However, "individual offices" for devs is now such a status symbol for the teams that still have them, that people at the management level are very unwilling to change. One designer I know spent literally a year trying to get permission to get his 12-person team into an open space. In the end he gave up and eventually left the company.