The work Microsoft interns do is along the same lines as what a standard developer does, aside from the fact that they have to ramp-up on the product and finish their project all within 12 weeks. What I'm trying to say is that while an intern obviously can't do as much as a normal FTE could in the same time period, as they have to learn along the way, they still do very real work. Interns certainly aren't coffee grabbers or paper filers, unless, of course, they're grabbing coffee for themselves.

The idea behind the program is that an intern is a potential new full-time hire, but because they're not ready to work full time (as in, they still have a year or two of college to complete), then Microsoft tests the water with us. They get a fair amount of work out of their interns, and the interns ramp up on a product at a rate that's ~80% of what they'd pay an FTE. If interns choose to return, then theoreticially, they've completed their ramp-up work already and hit the ground running.

Disclaimer: I was a Microsoft intern this past summer.