Microsoft has too many developers and not enough innovation. They encourage a design attitude that everything has to operate like the flight deck of a 747. Their culture has been incestuous so long that any change is terribly unlikely. There are some really, really sharp guys at Microsoft. Not only does the community deserve better products from such a great company, the developers in many cases have an very unpleasa…
I think where they're losing is that they've stopped communicating. With customers, with developers, even internally. They are proceeding down paths they imagined to be important. Some of them are, some of them aren't, and thus the hit-or-miss nature of their current business. I think a lot of this is Ballmer. He's trying to be a Jobs and failing miserably, when all he needs to do is allow his people to actually communicate with the community.
Another part of it is that they can't do anything these days without a bunch of FUD from the media and Anti-MS sheep. I actually like Windows 8 and appreciate the innovation even if there are some hiccups to take care of. .NET is great, and I hope they make it easier to move forward and migrate existing apps to whatever they do next. Will they die anytime soon? Probably not. But if they don't start communicating soon and often, they'll lose some market share for sure.