"MS fucked up because all it could see was Windows and Office on a phone"
MS got rich by selling the most amazing pup to the public.
Now spreadsheets were an excellent idea. LANPAR and VisiCalc really were revolutionary, as shown by the acronym - a language for programming random arrays. Microsoft managed to overtake the pioneers and become the standard, missing out on the way a whole lot of features programmers would like, such as easy locking of individual cells to hold data or formulae and the ability easily to click on a cell and have all its links back to fixed data turned into a note, but becoming hugely successful.
But Word was a con. The fact is that a document produced on a physical typewriter is no "better" than an over-DTPed memo, but Microsoft managed to sell the idea that if you weren't outputting a production-ready publication standard document complete with corporate logos and the like, the actual content was of no value. The result is that Word became a productivity hole, but an enormously profitable one. And it worked well with faxes. Incompatible versions of Word didn't matter when lawyers and banks relied on the fax machine.
And then people came along and started sending, kayn aynhoreh, plain text emails and expecting them to be treated like documents. And online companies started, anathema sit, giving people invoices and order documents in html. And the world did not end. The threat to Microsoft was obvious.
So, just as IBM microcomputer division was hobbled by the minicomputer people to protect the business model, Microsoft seems to have tried to force Word down the throats of phone users. But Google had no legacy software to worry about and could concentrate on things like delivering an email service where all the heavy lifting is behind the scenes.
Microsoft executives obviously never read Drucker, who pointed out that legacy and cash-cow business must never be allowed to hobble new products. But they are not the only ones.