Microsoft needs to wake up and smell the coffee. Nothing that they ever do again will match the success of their two great platforms: Microsoft Windows and Microsoft Office. Their latest attempts to match those platforms are those success stories known as the XBox and the Microsoft Smartphone.

Apparently, the memo went out to give Microsoft free advice this weekend. Dave Winer thinks they should show ISV’s the money and Robert Scoble thinks they should help the VC’s jumpstart new innovation. My advice is to take the Innovator’s Dilemma to heart and spin some companies off. My sense is that ISV’s want to hit singles for high average, VC’s want to hit home runs and Microsoft wants to hit 10-run grand slams.

Microsoft may need those 10-run slams. Options are the golden handcuffs that keep the machine oiled and running smooth. Given Microsoft’s current situation, a normal slam might not be enough to keep new options in the money. But a small spinoff only needs to hit singles. And that spinoff, operating without a safety net, might just find the next big thing.

And Bill, about Crossgain, don’t let that happen again. Get a piece of the action and shower them with love. You can grind them under your heel after they find a market for you to take from them.