Ironically, the best thing for Microsoft would be what could have been the result of its anti-trust problems, a company split. It's doing too much
I agree they're going in too many different directions but what they need to do is not necessarily split, but have a unified vision.
Right now they have Zune, Windows Mobile 7, Symbian and SideKick mobile platforms all in their portfolio. You would think they would try to create a best of breed combined mobile platform. But no, they're not. They missed the boat big time on ARM development.
With Apple developing tetherless setup and updating of iPads, Microsoft's control over the low end computing market (which, like it or not, is their bread and butter) is now in serious jeopardy. And instead of trying to work with hardware manufacturers to build something new and exciting, they're instead focusing their efforts at penalizing hardware manufacturers who work with competing firms.
Whatever innovation edge Microsoft has had is evaporating faster than a snowball in the Sahara. It is nigh on amazing the Kinect actually got created and while it could be a vehicle to more innovative products, I have a feeling that too will be another Microsoft had it first but botched it.
It's a pity that an organization with the resources Microsoft has cannot get the strategy to implementation going but that's what bloated middle management getting hackled by accounting will do to you.
If they can't get OWA to look pretty, how do they think they're going to be meaningful to users in any real way?