A few observations:

1. This group has been indirectly responsible for ~25% of MSFT’s annual M&A activity.  Of the ~20 companies MSFT acquires/year, ~5 start with a relationship nurtured by Dan’l's group.  (Note, if you want to be acquired for more than $250m, that will require MSFT BoD approval, otherwise, it can likely get done by a business unit champion.)
2. Partnering can build option value as well.  One of the startups I worked at before Trinity, PolyServe, got a foothold on the Windows ecosystem and ultimately built a meaningful revenue stream co-marketing and co-selling with Microsoft’s SQL Server and Dan’l's group helped pave the way for that partnership. While we didn’t get acquired by Microsoft in the end, it did help spark a successful ~$200m acquisition of Polyserve by HP in 2006.  The key here was finding an emerging or underdog business unit and helping that group win by coupling your product with theirs for a 1+1=3 joint solution. 
3. Azure, SilverLight and Windows 7 are the main new underdogs to tap into right now as a startup.  This makes sense as MSFT invests to play catch up with Google App Engine, Flash and makes up for missteps around Windows Vista. There seem to be serious co-marketing dollars to take advantage of here according to Dan’l.

Of course, when trying to mate with any large corporate giant, you have to be careful not to get stepped on.  Sharepoint, in particular, is their rising juggernaut.  With that said, with Microsoft facing new or emboldened competitors in cloud computing infrastructure and even in core operating system and office markets, they are wisely leveraging partners more than ever.  

Check out Microsoft Startup Zone to learn more.