This new quote from Gruber underlies exactly where the decline really matters most:
"It’s not that they need those customers, but that they used to drive the industry’s technical agenda, but now they don’t."
Where is Microsoft really driving anything at this point? It's not on the desktop. It's not in the mobile space. It's not even really in the enterprise.
The whole video tag argument in HTML 4 for example, is really between Apple and Mozilla. Microsoft is not really even a consideration.
If Microsoft is not really driving anything anymore, then they are just another company trying to comply with standards - and that means the inevitable (although slow) end of dominance they once enjoyed. For the computer industry, this is a good thing...
I don't see the App Store process as being developer hostile, at all. Yes there are a few specific areas where it's basically a hostile environment for development. But there is a far wider range of categories where the space is wide open. And that space is wider still now that Apple is finally letting people go hog wild with live video overlays in 3.1 (augmented reality stuff). You only see the contractions, but it's more than offset by expansion... and the contractions we do see, are bound to be temporary if other phones end up having compelling things the iPhone does not because of them (and the inevitable loss of AT&T exclusivity). That's far sooner than the 15 years you give them...
"If he had he probably would have noticed that over 90% of the desktops running Windows. Many of them with ie locked down."
But think about how astounding that figure is. 10% of systems in a company being something else in an environment utterly hostile to non-Windows systems. That would have been 99% just five years ago...
Looking at Snow Leopard features, it's finally a desktop that I would prefer to use over Windows in a corporate environment just because of better exchange integration alone. Apple is doing things that enable that percentage to grow significantly, and that is aided by a push from within by many people that have started to use macs at home and now would rather they use them at work as well.
And that's where the metric of "people that love computers" comes to be of such importance, because those are the people that make macs work at work, then the casual users can and will follow.
Frankly I think the healthiest situation would be a good mix of a variety of desktops in the enterprise, the Windows monoculture is a dangerous thing and lets internal apps really get mired in overly targeted technologies that don't allow use from other platforms - which eventually leads to issues in upgrading the platform you do have down the road.
"but guess who will win in the emerging markets like China, India and Brazil."
The one with the best mobile OS?
Unless Microsoft buys Palm, it's not Microsoft.
Sure iPhones are expensive now - but older ones will start reducing in price for markets like India/China - and the iPhone has very good internationalization support, along with a virtual keyboard that is far better at adapting to languages like Chinese for input.
You speak of long term but you are only looking at iPhone prices today instead of the fundametals.
It's a real UNIX, it even ships with Bash...