Frankly I don't think Microsoft has ever understood any market at any point in history.
In the 70s and 80s they lucked into making two decade-definingly good deals with catastrophically mismanaged hardware companies (Apple and IBM) and they've just been coasting on that monopoly power ever since. They have almost no good ideas or products beyond that "nobody ever got fired for buying ACME" quality, which they've also been slowly leaking.
i personally liked when they failed at mobile three separate times with three separate, barely related product lines















