Microsoft's development tools were lagging behind Borland's tools in the 90s, but those tools were top-notch nonetheless. Did you know that there are people still happily using Visual Studio 6.0 (1998)?

Also, if you're referring to Anders Hejlsberg, being the lead architect of C# doesn't qualify as "sit on their thumbs". Considering that .NET is one of the 2 competitive advantages that Windows still has in the corporate environment (the other being Exchange), I think it was a million dollars well spent.