Microsoft's business has never been better. Ironically, that may well be the problem.
I will admit to a love/hate relationship with Microsoft. I tend to respect Microsoft's technology but not the business practices wrapped around it. In fairness to Microsoft, it has traditionally been the latter that really drives its business, pushing the company into new markets.
Of late, however, Microsoft's successful business strategies seem to be stifling, not stimulating, the company. The company's success at hoarding existing monopolies seems to have made it intellectually lazy in seeking new ones. Even SharePoint, which has been phenomenally successful financially, is little more than a lightweight portal designed to prop up Microsoft's existing businesses: Office, SQL Server, Windows, etc.
This may be good for the industry, but it's certainly not good for Microsoft. Whatever Microsoft may think of itself, it has never been much of a technology pioneer, preferring instead to copy others' ideas but deliver them more conveniently and at better pricing.
Microsoft has failed on the Internet, and will continue to fail so long as it tries to impose old rules on this new medium. Microsoft makes oodles of money on the desktop and can't afford to disrupt its monopoly there. Microsoft will continue to make massive amounts of money on the desktop until...it doesn't.
Heck, not only does Microsoft struggle to leave the desktop behind, but it also struggles to reinvent that Windows desktop experience. Some suggest Windows would be better if it were more like the Mac, but Microsoft is a prisoner to the calcified expectations of its XP customers, as Vista's failed experiment shows. In consequence, developers are abandoning Microsoft's future, preferring instead to cozy up to its past. This isn't good for Microsoft.
I miss the old Microsoft. I miss the Microsoft that swaggered around the industry, playing hardball and creating compelling products. I miss the Microsoft that competed based on its products, for the most part, rather than on legal strategies.
In my particular market - social computing/Enterprise Content Management and Collaboration - Microsoft is a worthy competitor, and I love it.
But I find Microsoft tedious in many of its other markets. The patent FUD in its competition against Linux demonstrates Microsoft's own fear, uncertainty, and doubt vis-a-vis Linux. It's a weak-kneed admission of a failure to compete. Microsoft doesn't know how to compete with Linux, so it resorts to patent saber rattling.
Microsoft's legal challenges of Google's DoubleClick acquisition and the Google-Yahoo! partnership are more of the same. When Microsoft has to turn to the law/government to fight its battles, it is clearly on the decline. You don't ask the government to compete for you if you're capable of doing it on your own.
I'll speak heresy here: I want the old Microsoft back. I want the old ambition back in Redmond. I want the swagger and bare-knuckled competitor. I want the boxer, not the befuddled giant desperate for its denture cream to shore up its bite.
Google will be better for having a real competitor. We all will. Come back, Microsoft. Stop pandering to your old dominance and attempt to forge new areas of dominance. Please.