I mean this is what Next/Apple essentially did with BSD correct? Took BSD and created their own UI/services layer on top of it.
What's their motivation? Why do you think that Microsoft can't write an OS?
As pointed out elsewhere in the thread, last quarter, Microsoft's Windows division reported $4.58bn in revenue and $2.24bn in profits and represents 91% of the desktop market: http://www.netmarketshare.com/operating-system-market-share....
Apple knew their competitive advantage (the UI/services layers) and essentially outsourced the rest. For Microsoft to outsource Windows makes as much sense as Apple outsourcing their UI[0].
Windows, on the other hand, has tremendous backwards compatibility of executables going back 20 years. Until a few years ago (when Windows phased out 16-support), they beat even Linux in the backwards-compatibility category.
The Windows OS is crufty and ugly, but given the incredibly wide range of use cases it needs to support (both horizontally, across industries in the present, and longitudinally, across older systems), it's remarkably robust.
I certainly don't think Windows is a fun OS to write for (or even to use - I run Linux). And I would vastly prefer if Microsoft made the main line of Windows POSIX-compliant[1].
But I see no reason to come to the conclusion that Microsoft should "throw in the towel" when it comes to their OS.
[0] Apple does outsource their hardware production, but that's because SCM is itself one of their core competencies.
[1] That's probably the only thing that would make me even consider going back to Windows