This is why Ballmer needs to step aside.
Android is unquestionably the biggest danger to MS as it fights them on their own turf. Meanwhile Google are gearing up to go after the living room, thus threatening MS's dream of dominating in that space also.
In both fields Apple competes, but Apple is always happy to be a niche player making a lot of money out of a smaller market. Google is going right after Microsoft's lunch by playing the commoditize and monetize model, except Google money comes from ads not licenses, giving MS a blunt value for money problem.
So why the hell are MS fretting about Apple's clearly self-limiting model? I'd be watching RIM and Google more closely if I were them.
Still, Apple is the old enemy, and Ballmer is nothing if not backward looking.