One reason why Microsoft innovates time and time again is because it invests a lot of capital in its R&D teams. I came across this article this morning in my Google reader from Digitimes that discusses Microsoft's latest announcement that it will be opening up an innovation center in Taiwan. This center will focus heavily on next-gen web applications and software engineering. This center will house a team of 100 members, most of who come from Microsoft's Chinese R&D team. I'd like to see some examples of other companies out there who realize the benefits of allocating more money towards its new product development teams.
Microsoft Keeps on Innovating