Microsoft still has virtually all of its revenue-generating eggs in the Windows and Office baskets. Company brass know this, and are scrambling to diversify with newer ventures in the handheld device, gaming, home-entertainment and online-services spaces.

But instead of being applauded for their resourcefulness, Microsoft officials are finding themselves increasingly dinged for spreading the company too thin.

Is the charge justified?

Claims that Microsoft is trying to bite off more than it can chew are nothing new. Microsoft pundits and customers have slammed Redmond for straying outside its core areas of expertise — with projects ranging from its 64-bit "Liberty" database, to its "Tiger" entertainment-on-demand system — for years.

But with the growing discrepancies between the revenues (and losses) generated by the Windows and Office cash cows vs. the ones generated by Microsoft's fledgling businesses, the critics are becoming more vociferous.

Some company watchers, such as former Microsoft developer Adam Barr, say that Microsoft uses its budding ventures as a perk to keep millionaire "old-timers" from retiring. Got a guy who has put in years on polishing the hardware-abstraction layer in Windows? Throw him a bone: Let him go run the Halo team.

Barr claims this mentality does not bode well for the company.

"The combination of people hyping projects because they think they are cool, and executives worried about missing the next big thing, results in Microsoft funding some dubious projects," he postulates. "For example, one of the critical upcoming tasks for Microsoft is making the next version of Office compelling enough and useful enough that people actually want to upgrade to it. Yet within Microsoft working on something like that is generally considered boring, while helping Xbox lose $100 million or whatever is seen as cool."

Others say Microsoft would do better to split itself up (without prodding by the Justice Department) and let smaller, more entrepreneurial Baby Bills take responsibility for turning pipe dreams into paying products.

Speaking of Bill, the Microsoft chief software architect has said he is prepared to take a bath on MSN, small-business applications, XBox, Pocket PCs and SmartPhones — at least for three years.

Gates says Microsoft has redrawn its map of the world and is targeting five form factors: wall-sized, desk-sized, tablet-sized, pocket-sized and wrist-sized. (We're not exactly sure where high-end severs would fall in this taxonomy, but let's assume "desk-sized," for the sake of argument.) In order to truly deliver on Microsoft's long-standing promise of enabling computing any time, anywhere and on any device, Microsoft needs its platforms other than Windows and Office to grow and succeed.

What would you do, if you were BillG? Would you try to wring even more profits from Windows and Office via new licensing models? Focus on less-risky new businesses in which the company is more of a household name? Port your software to new operating systems (dare we say the "L" word?)?

Write me at mswatch@ziffdavis.com and let me know what you think.