I think you paint Microsoft's future as much to bright. Granted they have billions in the bank but what do they do with it? They certainly aren't using it to fuel innovation. Two areas that they should have dominated--internet search and online music--they totally missed. What exactly were they doing during the years it took Google to rise to the top? Why wasn't Microsoft spending some of those billions developing competative online search capabilities back when Alta Vista was king? The same can be said for online music. How can a company with virtually unlimited resources and a 90% market share be forced into a position of reacting to current market trends rather then defining them?
When a company like Microsoft loses it's ability to define markets and trends bad things can happen. Imagine telling Stanley Kubrick in 1968 that by 2001 PanAm would not only be irrelevant, it'd be out of business. I'm not suggesting MS will follow PanAm into oblivion any time soon but I do believe it's market dominace and relevance to the industry will start to wane.
The Gathering Storm: Waiting For the Microsoft Beat Down