Hi OP. Your points, as I understand them, are the following. Correct me if I'm wrong.
* MS is not a good example of a strong engineering org. Further, it is not a good example because Windows sucks.
* Google doesn't employ every smart person ever.
* Google can't actually compete. (ed note: in any field, or just against iOS and Fb?)
* My argument is like the argument that no one would supplant Windows.
* Given enough time, everything dies.
Points 2 and 3 are about Google. Let's start there. You're right that Google doesn't employ every smart person ever, but then, who said they did? :) But there are a limited number of search relevance engineers, and finding enough to keep up with Google is a monumental, and maybe insurmountable feat. If you want to compete with Google, you will need to have a serious advantage that supercedes this. That is just a fact.
Point 3 is about competition. I'll grant you that G+ is no Facebook, but Android is the most widely adopted mobile OS on the planet, and by a huge margin -- iOS is basically not even competitive, except for the top 5% of the market. Further, a billion smartphones will be bought this year, the most of which will be Internet enabled Android devices, and most of which will be bought in developing countries by people coming on the Internet for the first time. You tell me who's forward thinking there, because when that market comes online, it will be huge. The fact that you mention this as being non-competitive indicates to me that you might not know what you're talking about. :(
Point 1 is about the MS org. What can I say, OP, I work here, so maybe I'm not the best person to have this discussion with. But FWIW I chose this place over some much sexier jobs because the team I work with is arguably the best of its type in the world. There are bad neighborhoods, but the disparity between a good team in MS and a good team at Google is basically negligible. Also I think Windows is one of the great engineering feats of CS, so ... :| (Note that I still use UNIX at home.)
Point 4 is probably the result of confusion. I don't think no one can compete with Google. Bing has 20% market share! Clearly we can. But I do think it will be hard to compete with Google on search quality. I don't see how you can argue that.
And point 5 is obviously true but not relevant.
EDIT: Actually I now see your point 1 as saying "MS couldn't pull this off because they're not a good engineering org, but someone else could". Maybe someone else can build a better search engine, but I think what MS has pulled off with Bing is a monumental feat.
For starters, we built the entire Bing stack from scratch. No OSS. No common platforms like the JVM. Nothing like that. We started from nothing, and invented the server infrastructure, the data pipeline, the runtime that would support the site, the ML tools, everything. The fact that the site runs at all is a small miracle, but the site does not "just" run: the most remarkable thing by far is that the quality of our tooling is quite incredible, generally an order of magnitude better than the OSS equivalents. For example, the largest deployment of an OSS NoSQL datastore seems to be a few thousand nodes. The small NoSQL cluster backing our MapReduce implementation is stably deployed on a cluster an order of magnitude larger than this. This is something you only really see at companies like Amazon, Google, or MS.
I understand that the consumer market is not something MS is strong at, but I am hoping this gives you a taste of the scale and quality of what's happening behind the scenes. Happy to talk more about this if you drop me a line or skype me at `mrclemmer` :)