The reality today is that Microsoft does not have the engineering talent that they used to have, and their design talent has been completely drained. They simply are not a 21st century software company anymore. The marketplace perception of Microsoft now is that they are a dinosaur that also makes a gaming console. Period.
They may very well have a functional competitor to EC2, but I cannot think of one serious company that is choosing Azure over AWS, or Rackspace, or even Digital Ocean or Heroku. The Azure Case Studies page is an absolute joke, a mockery of what you would expect from a behemoth as Microsoft. The simple fact is that Amazon completely owns the market that Microsoft is trying to break into. (This is especially funny given the years 1992-1996)
They may very well have a functional competitor to Google Docs/Drive/Apps/whatever it's called now, but again, Google is totally dominating that market (crappy updates to Gmail aside). Microsoft is stuck on the outside looking in, and anyone who is starting a company, given the choice between Office 365 and Google Apps, they aren't picking Office anymore.
Windows Phone is a joke and I'm not going to devote any more words to it.
Windows 8 isn't even worth any discussion.
The reality is, is that as kids in college today enter the workforce with their Android or iPhone, and Gmail/Gdrive, and knowledge of AWS, the need for Microsoft (which you have to admit, MS has been coasting on for probably 15-20 years now) is evaporating. If all Microsoft ever tries to do now is play catchup to Amazon, Google, and Apple, they're won't necessarily be squashed, but they'll just become irrelevant.