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It's probably more accurate to say they've lost mindshare. The amount of PC marketshare they've lost to Apple is still pretty small.

But the biggest problem for Microsoft is that the market is shifting. Between smartphones and tablets, people just don't need PCs as much. So Microsoft is desperately trying to be a factor in those markets. Shrinking the PC down to the size of the Surface isn't a bad idea, but it will make OEMs very uncomfortable. They are feeling the same market pressure to get small and mobile.

Mindshare is more what I meant than marketshare.

If you look at Wikipedia's statistics, Microsoft represents about 75% of visitors: http://en.wikipedia.org/wiki/Usage_share_of_operating_system...

I imagine that in 2002, their share would have been hovering around 95%.

I think the more accurate statement would be that they have lost market share in specific markets and have failed to adopt share in others.

A decade ago, they had essentially 100% of the market. There's nowhere to go from that but down.