Despite not thinking MS is d0med (yet), it's true that increasing capabilities of smartphones and other small portable devices, where Windows CE/Mobile is weaker than most competitors, is doing what the first underpowered Linux netbooks couldn't (also due to incredibly poorly chosen and taylored distros back then): undermining MS Windows and Office power, not competing on PC, where MS is almost unbeatable, but marginalizing the pure Windows PC market by building around it a larger market that doesn't use MS formats and SW. This way, Linux and OpenOffice, despite being a minority on PC, become a part of the majority when it comes to what document formats are used. The first effect is visible in the web browser market share, IE dropped below 50% on PC, and it won't be able to recover anymore, as web browsing is one of the most widespread activities on non-PC devices, so, thanks God, the use of MS proprietary formats and HTML extensions on the web will be more and more counterproductive for web sites, undermining the base of IE power. The same will happen, just slower, for user generated documents, undermining MS Office. MS won't die, but it will finally have to do its best, like it's already forced to do with XB360 and Kinect, to compete. The time of resting on its laurels and monopolies is over.
BTW this explains while there are so many rabid MS astroturfers unleashed around the net, Ballmer must be even more furious than usual. 
