Not disagreeing, AC, but ...
... I think what he's saying is that it may be harder to *shine* in such a situation, because doing the job well and competently may be a lot easier. In sports, there's a saw that you don't want to be the guy who takes over for a legend. If you succeed, it's because your predecessor built the team. If you fail, it's all your fault. now, imagine taking of MS from Gates. At that point you have one direction to go: down. If MS had come up with iTunes + iPod + iTunes Store, well, big deal, they own the PC market, no surprise. If they had come up with the iPhone, well, big deal, they've been in smartphones for years, and they have a bunch of money to throw at the issue.
Believe me, I am *not* defending Ballmer. As long as he is CEO at Microsoft, he might be Apple's best weapon. And Google's. And RIM's. And ... But given the head start he was given, what could he have done to impress the hell out of everyone? A bacon-flavored interface? Plasma-powered horses?
That being said, the only success MS has had under ballmer has been from inertia. That MS has to fight on so many fronts - Linux (and open source in general), Apple, Oracle, Google, RIM, IBM, etc etc etc, - and that they can't concentrate on one long enough to kill it off on that front may be their undoing. They are facing, in business terms, what Prussia faced in the late 1600s geographically. And I don't see Ballmer, nor Ozzie as being a spiritual heir of the Hohenzollerns.