Microsoft has a long standing, dominant set of softwares (Windows/Office) that has been its cash cow for longer than many of us have been old enough to vote. It's the classic case for disruptive technologies:
1) The old, highly profitable incumbent using old technology and charging pretty pennies for it.
2) The new upstart technology, able to do similar stuff in a new context and dramatically cheaper.
3) Incumbent tries to mash its old technology into the new context to preserve its margins.
4) Incumbent dies a death of a thousand paper cuts as the new context, typically more nimble and with an entirely new, cheaper cost structure, slowly peck at the old incumbent until it's irrelevant.
Many of us old-timers remember when IBM ruled the roost for the PC. Some of us remember when DEC was the dominant force for mini computers. A few of us remember when IBM ruled the roost for computing mainframes, before the mini computer took sway.
We should give Microsoft lots of credit. Microsoft had a *long* time at the helm. It was able to cash in on the entire PC revolution, and even much of the Internet revolution, until the Mobile revolution, which it foresaw a decade or more in advance and tried hard (but hardly) to embrace.
For me, going from Windows Phone 6.1 to Android 2.2 on a Motorola Droid 2 was like going from a rusty riding lawn mower to an LXi Convertible. It's sad, really. Microsoft had its part in the mobile game for several hardware generations, and they were beaten so mightily that they are now basically the upstarts trying to be a halfway, third place contender.
Admire what they've done, but this mobile situation is just sad given how hard they tried.