If we take the mantra: "Create something that people want and want to pay for" what would be the application you would create if there were no competitors?

As far as I am concerned it would be the Office suite. People at every company want to edit documents, spreadsheets, presentations, and companies can pay for such software. Companies buy (hundreds of?) millions of MS Office licenses. For me Microsoft = MS Office. Microsoft will remain a huge and profitable company until no one can really compete with MS Office. Most of the things the tech media speaks about is irrelevant in this respect. People will not want to edit documents on smart phones and touch-screens. It is really not sure that people want to edit their documents using an Ajax app and want to host all of their documents remotely at Google.

I would say that other big companies seem to have bad strategies: If they wanted to kill Microsoft they would just have to compete with MS Office directly. The problem what MS Office solves is an essential one. It is incredible that Microsoft has almost monopoly at such an important market.