But I'm pretty sure hotmail still has higher market share than GMail. And though I use Ubuntu over Windows, but the world is still all about Windows. From a revenue perspective, Windows made more money this year than in any previous year. That's good news for Ballmer.
And Surface is really cool. MS Research does incredible work. Office is still king, and no one has come up with anything close to an Outlook-killer yet.
I don't actually use any of the products you or I mentioned, but MS has plenty of strengths and smart people to balance it's blatant failures.
Edit: Photosynth is yet another highly impressive product from MS Live Labs.