Many US Residents can only choose between two broadband providers, which is mindblowingly small competition.

Specifically because of the types of programs you have suggested. Governments stepped in to limit competition by preventing competitors from entering the market.

Having smaller divisions focus on something isn't the same as having a dedicated company. Why?

You are mistaking different things here. A company, wholly focused on one thing, does not make it better or more efficient. Your copy paste only servers to show that you do not understand that function. Executives don't cut division A because they aren't passionate about something, they cut it because it is costing too much, doesn't present a return, isn't progressing properly, or any other myriad of reasons. The same thing would happen in a small company.

You are trying to inject feelings into a business and the business decisions. No successful company, no matter how large or small bases their business decisions on passion. All companies, large and small, look for financial results because those are the only results that allow them to stay solvent. You don't have to look any further than your local store and ask them why they stopped carrying an item. Even the small stores will tell you "Because it didn't sell". They can be as passionate about an item as they want, but if it doesn't make money, then there is no reason to keep it.

I would also point out that your entire quote is exactly how Microsoft functions today. Each group is solely responsible for their product and no others. Office has nothing to do with Windows, Servers, Skype, or Xbox. They may develop for those platforms, but they aren't beholden to the next version of Windows. Xbox does not design games with Office in mind. Why would it?

But then another thing comes to mind in your "passionate" response. You talk about getting approval for features and putting money into it. People don't pay as they go for features and products. The item in question is conceptualized first through a project and then a budget is created based on the concept. From there the money is allotted and spent on the project from that budget. Executives don't yank funds in the middle of a project unless the project shows signs that it is going to go grossly over budget, is not creating the product needed, or has turned into something that doesn't fit the original concept/need.

Do you think NASA should be pieced out? They are a huge organization with hundreds of divisions. They are too large to have people working passionately, right? What about the military? Their R&D division stopped turning out advancements because they have tens of thousands of divisions....

Certainly Apple isn't an innovative company, right? They have hundreds of divisions. GE? Ford? Toshiba? Dell? You are telling me that none of these companies innovate? Or that reducing their ability to acquire talent and machinery would improve that?

Just because they are big, does not mean that they aren't innovating. Just because someone is small doesn't mean that they are. People will create no matter where they are. Smaller companies (startups, not established firms) will take large risks and most of them fail. That is why established companies don't typically take large risks. The ones that don't become the next Google, GE, or Apple.