In light of the won't do and can't do, Microsoft sits there, and watches its market share begin to erode. That's happening slowly at first, but the snowball is rolling. A few people are starting to look up the hill and notice this big thing barreling down at them, and some are bright enough to step out of the way.
I believe this is going to happen. The most convincing arguments are the "arguments from culture":
The culture at Microsoft , however, prevents change. I was talking to a high level person in charge of security at the Intel Developer Forum last fall, and we chatted about what Microsoft could do to fix things. He asked the right questions, and I told him the right answers, trust. Plus, throw everything you have out and start again. He didn't get it. No, more than that, he was impervious to the things I was saying to him, the culture is so ingrained that the truth can't penetrate it. Microsoft cannot fix the 'bugs' that lead to security problems because they are not bugs, they are design choices. When faced with Java, Microsoft reacted with ActiveX. That, it claimed, could do everything that Java could not, because Java was in a 'sandbox', and programs could not get out.
As a software writer, I don't necessarily agree that "throw it all out" is a viable solution, either from a business point of view or a software engineering point of view. Nevertheless, the inability of the Microsoft culture to adapt to or even understand what is happening is going to inevitably doom them, and it's probably too big for anybody to change now.
I've been concerned about my career choices to this point; I started on Microsoft technologies but for the last few years I've been in the Linux world. I'm really not that concerned anymore, and now I'm glad I missed that mess.