This slide has been going on for some time
As far as I can see, MS only has two problems:
1 - leadership. For setting a strategy to profit you need a clued up thinker, not a show monkey. Show monkeys are supporting cast, but without leadership, well, QED.. Ballmer is a bully who you need to target to get results. He doesn't have the brains to set targets himself, he lacks the required long range view.
2 - innovation. Traditionally, MS has lived off buying or stealing innovation, and putting a more glossy wrapper on it. The problem with that is that the company itself is actually arch conservative - unless an idea feels safe they're not going to run with it, and, what's more, it has started to believe its own projections. Most of the new market innovation has been properly branded, locked up in patents or done under a license prohibiting proprietary use, leaving MS with almost nothing new to market themselves. What do you do when you don't have a clue about innovation? Well, you pretend. Hence the MS Office ribbon and the confusing interface changes in Windows - all are glossy (and actually detrimental) covers over old technology, which only the blind, the fanatical, the paid and the gullible will herald as "improvement".
MS has bought enough talent to come up with new ideas, but it suffers a real classic problem: it is scared of that talent, because the good ones speak their minds.
Though seriously needed, criticism is never welcome in a company with weak leadership.