It has long been my belief that Microsoft has seen its best days and is now on a long, slow slide downwards. Note I said long, slow slide. While anything is possible, I think the probable course is a slowly decaying orbit much like a once high flying satellite - not a sudden collapse.
In an ABC News commentary, Michael S. Malone seems to agree. Using what he calls his smell test, Malone says he detects the tell tale smell of decay coming from Redmond.
The author says he sees two characteristics that lead him to his conclusion. First, mind share seems to be united in fear and loathing of Microsoft (so what else is old? - ed). And second, major delays in core products, i.e., Longhorn being, so far, two years late and missing core features (see earlier comment - ed) are occurring with regularity.
While no one can accurately predict the future all the time, I think his perceptions are correct.