I agree. For example, Leslie Lamport, who invented many distributed algorithms that are used at Google (eg. Paxos is used in Chubby and in Megastore) works at Microsoft Research. Watching or reading interviews with him, I get the feeling that he is a "pure [computer] scientist", probably not that interested in getting his stuff into the next product.
I suspct if left completely up to Sinofsky or Ballmer MSR would shut down (or be substantially smaller). I think as long as Gates is alive and/or has large influence, it will be a relatively big part of MS.