Office would do well without the rest of Microsoft (in fact possibly even better), but I'm not sure the rest of Microsoft would do well without Office. Office is a huge stable cash-cow that allows Microsoft to experiment on things like Kinect without having to worry if they aren't always profitable.
You could argue the same thing with Apple and iOS. iOS would be better if it weren't so tied to OS X, but I'm not sure the rest of Apple would be in anywhere near the same position (or even still around) if it weren't for the big iOS and iPod cashcows.
They bought Kinect. And if Office is the cash cow, why are its limitations then defined by other Microsofts interest?
Apple and iOS isnt really comparable because the integration between the two is possible only because they are both from the same vendor. In that particular example, its adds value to both products, which is the opposite of the dynamic between Office and Windows, where the value is decreased.
1. If people could develop for it on other platforms it would significantly increase the number of people able to write iOS apps globally, particularly people from lower socio-economic groups. In the short term it doesn't make a big difference, but there are millions of people in India and China that can't afford even an entry level Mac, and I think in the long run this is detrimental to the ecosystem.
2. Many iOS services are tied into the Apple ecosystem, such as messages, notes, facetime etc. If they weren't using iOS to try to get people onto OSX then these services would be more likely to be cross platform and therefore far more useful.
It's the same problem with Office. MS are using Office to help keep big business on a full MS stack - Windows, Sharepoint, Windows Server etc. And it's business that really matters to Microsoft. If Office were to be split off, they would be more likely put it on all smartphones, Linux, write a better OSX version etc, but it could weaken Microsoft's position wrt its other products.
It would probably be great for consumers if these companies took the attitude of making their products work best in a full stack, but still play nicely with everyone else's products, but they seem believe (rightly or wrongly) that it is in their own best interest to push for vertical integration and implicit or explicit lock-in.
You could argue the same thing with Apple and iOS. iOS would be better if it weren't so tied to OS X, but I'm not sure the rest of Apple would be in anywhere near the same position (or even still around) if it weren't for the big iOS and iPod cashcows.