The future is in integrating cloud services and Azure is a pretty good one, minus a few things here and there. I think that MS is well poised for the future of cloud computing, Windows 7 natively supports a good number of useful, new features in Azure. Not to bash other companies, but aside from Google, MS is the only major player with their own end-to-end model for the cloud; from OS to platform(.NET) to languages(C#) to development IDE(Visual Studio) to SSO(LiveID=OpenID), etc. And Google is even lagging behind on some of those ideas at that.
I just can't see this as a huge issue. It's the nature of the world(especially technology in general) to ebb and flow, and with nearly $30b, MS can ebb for quite some time. If I had any suggestions for MS it would be to port Windows 7 to ARM architecture, I think Intel is who should be watching out as ARM runs more machines in this world than any other CPU.