Death by Monopoly
Microsoft by various means fair and foul has built itself the greatest monopoly since the British East India Company.
Unfortunately for them, when you have a monopoly, your business goals pretty quickly turn to finding ways to protect your monopoly.
Microsoft have had that goal as their primary focus for over a decade.
The problem is that defensive strategies will never lead to victory, they can only prolong your survival.
MS spend so much time and effort trying to maintain their own metaphorical Maginot Line that they tend to largely ignore the concept of going forward.
They have a bunker mentality.
Even when they do try and escape the bunker and get new products out they do it with the attitude of "How do we ensure that this doesn't damage our Windows+Office hegemony" or even better "How can we tie this into our Windows ecosystem thereby adding another section to the Maginot Line and make the monopoly stronger"
Because of this attitude, they are simply incapable of thinking outside of the bunker.
This is why they will inevitably fail*. The only question is how long will it take.
* I define fail as loss of the market dominance that they now enjoy. I doubt that they will ever completely fail (as in go bankrupt).