I will agree that there is alot the average computer user has no idea exists, and Media Center is a prime example. I think all of that falls back to marketing. MS does alot of online advertising but it has no rhyme or reason when it comes to placement.
An example I can think of is the advertising of Visual Studio 2010 beta on a sports forum. I don't think an average football fan is interested in coding, yet there was an ad being directed at them.
Since MS has started doing TV commercials again, you can see where the markets has improved. Ads for 7 and Bing have been playing the last couple of months, and guess what? The usage and sales have improved. I wonder where the Zune HD tv ads are? Oh,
that's right they don't exist.
ZDNET's John Carroll has his
take on the innovation problem at MS as well. It's a good read that goes a long way to shine more light on the subject.
I never really liked Bing commercials. They are kind of obnoxiously trying to sell a problem that doesn't really exist. (Honestly I think Bing's website is far more "information overload" then Google's simple interface)
Now take a look at Google's commercial and tell me who has better taste:
Well this is Channel 9 (Microsoft site), so I am not going to expect the right answer.
Windows 7 is obviously successful (as all version of Windows since 3.1 have been), but Bing is herromiging money at a rapid pace, and around hovering 3% global marketshare. http://gs.statcounter.com/#search_engine-ww-monthly-200901-201002
Anti-trust limits Microsoft's ability to compete with Google in the way they really like to (eg, ban Google from Windows). So I don't think they will really be successful here, they clearly have no idea what they are doing.
But there is no shame in sticking to what you are good at: operating systems and productivity software. I'm glad they are starting to give bigger dividends.