Funny because the other day, I was thinking pretty much the same thing. Microsoft is slipping more and more, and it seems inevitable now. The only bright spots I can see are their stranglehold on key software markets, but as free open source projects become more popular and Linux becomes more user-friendly and increases its compatibility, it's only a matter of time.
I suppose you could argue that Xbox and Microsoft's game division are a huge bright spot, but that division has been running in red until probably recently, and without Halo, it never would've made it past the original Xbox. And then the RROD fiasco and extended warranties, they're just burning money trying to stay competitive. All it takes is one negative console generation, and Xbox could go the way of Sega or Atari.
Microsoft is going to have to use brute force and a ton of money like they always do to succeed.