Weak, myopic leadership which has consistently led to a lack of innovation or even (IMO) basic competence. Their profit mostly comes from windows and office, both products that are extremely old, vulnerable, and in a state of decline.

Microsoft has some other sources of revenue but nothing really innovative or capable of huge amounts of growth.

Because most profits actually come from two cash flows that were in a much stronger position before

I tend to agree with you, even if I am no expert.

They might have diverse sources of income, but the majority comes from Windows and Office. For at least the last decade I was watched as many new companies have been run with mac/linux. This doesn't mean much when they are little five person startups, but as the years go by those startups grew and now we have some very large companies that are not based upon Microsoft and plenty of medium size ones. This creates a feedback look of employees that don't train people how to write microsoft a check each quarter, but how to use linux servers etc. It is hard to ignore this as a long term trend. In fact it is so weird/odd/rare that stories get posted here on HN about the reasons why startup X choose to be a MS shop. Saying I am going to use github, amazon and google apps wouldn't get any interest, it is simply what people do these days.

Where I work, it is all Macs (100 people or so), iPhones and iPads - everything is Apple. 100 person company is tiny (by Microsoft standards), but consider 100 companies with 100 people each - suddenly it is not small anymore. Add to it some mid sized companies, and departments from big companies that slowly replace windows with Mac/Linux, it looks pretty bad.

Microsoft's death won't be sudden like Myspace's. It will be slow and will spread over decades. Unless wake up. Purely from a engineering view, they are still a formidable player, and they invest in R&D more than anyone else. If they want, they can still make things happen.