Somebody has to do fundamental research, but then they have to have big coffers to defend those patents in court -- big companies can win the war whilst losing every battle, like Sony did versus the makers of Bleem. Sony lost in court but Bleem went out of business in the meantime, and the employees scattered, some working for Sony anyhow.
Similarly, if you want to advance anything nowadays, you have to be working for a company that is already successful, and if you can do your job and find time for research, then why have a separate research department which is not doing anything towards development?
There is enough leftover wisdom from the Space Age to give tons and tons of innovations, but in fact, there is profit to be made by doing two things:
1) the same thing, but with less burden (financial, cognitive, or social) on the customer -- e.g. Netflix vs Cable, WIMPs vs. CLIs, any so-called social media which does not require you to actually take a shower, get dressed, leave the house, or even own a house)
2) things which were done before but with less specs, e.g. "HD remakes" of older games.
Microsoft, in particular, is now in a state of maintaining its monopoly at all costs, which is a well understood problem, and a matter of maintaining mind-share and blocking competition rather than growing market share or being competitive. It does not need research at all.
It can just buy (or license) it, and bully those who do not comply with underhanded legal tactics (patent trolling, sue-to-death, et cetera).