People seem to forget just how much stuff runs on windows, and just how often some of those things get upgraded. Retailers, Governments and Financial Institutions hate spending money on replacing things that work, but guess what Windows XP is being killed. That means that these big entities who don't want to spend money upgrading, are being forced to. I guarantee that money isn't going to Linux, and it's probably not going into Windows 8, and that means Microsoft will get another chance to get an end of life boost in another couple of years.
In the meantime they are trying to consolidate their platform. Bringing mobile and desktop together. It's the right move, and they should definitely continue on that. Ballmer said he wishes that he'd put more talent into Windows Phone earlier. Well it's never to late! Get to it! Use some of your XBox pull, Apple and Google seem to be making plays at the gaming market, use what you have and try and beat them to the punch!
Microsoft does slowly seem to be adopting some of the strategies of Google and Apple which is a good thing! Buying Nokia had to happen and ultimately is a good idea. Keep in mind Google did the exact same thing with Motorola, and no one called it a desperation play! Understanding the pain points of an OEM I think will help them ultimately create a better product for other OEMs. It may also be time to think about not charging OEMs for Windows Phone OS, at least for this cycle. It would be a way to increase adoption of that OS by cheaper OEMs and get broader adoption. It also may be time to broaden the horizons of your own apps Microsoft.
Getting Office onto other devices NOW is absolutely vital! People know office, they understand it. To some extent the Ribbon is already touch capable. Release and Android version, release an iOS version! How many management folks really do not need a full laptop? Sure you may be cannibalizing some of your own market by no longer selling your OS, but the reality is that market is already being cannibalized by smaller start ups, Apple and Google Docs! They are trying to eat your lunch, and succeeding! I for one already tell my son to use Google Docs! He doesn't need all the fancy stuff that lives in office, but he does need to have access to it anywhere! If it helps your bottom line and time to market, make two versions, a light and a full featured!
As much as I love Open Source software (and Microsoft is a huge contributor to Open Source despite what you may think), something to keep in mind is that Microsoft makes great tools for business. Office is a VERY powerful tool, and Microsoft's developer tools are absolutely amazing. It really does amaze me how little fan fair Visual Studio gets. Hands down it is the best IDE (Integrated Developer Environment) I have EVER worked with, and they do an excellent job at improving it year after year. C# is a great coding language, and .NET a great framework. I love the fact that thanks to Microsoft and Xamarin I can even use it in Linux, iOS and Android.
With all its irons in the fire, Microsoft has the ability to reorganize and be a strong competitor. I'm not sure they will ever reach the position they had in the 90s, but that doesn't mean they can't be in the thick of things, and it definitely doesn't mean they are down and out. Sure they've made some miscalculations, and missed some opportunities, but that's the great thing about the tech industry. Everything moves so fast today's underdog can be tomorrow's juggernaut, and if any industry has a history of recent turn arounds, its this one. Apple is one example and Yahoo seems to at least be on the path back.