Microsoft isn’t going away, but they aren’t going to do a lot of things right in 2011, either. The company’s leadership is stuck, complacent, and just a bit thick. We’ve seen a lot of flux in the executive ranks reporting to CEO Steve Ballmer and I think that’s mainly because Ballmer won’t get out of the way. There is no upward mobility path so people leave. But don’t expect Ballmer to leave in 2011, either, which means more mediocrity. So Microsoft will continue to be a huge presence, but not feared in the industry the way they used to be. They’ve become the new IBM.

Windows Phone 7 is almost there, for example, but almost isn’t good enough, so it will be pummeled by Android and iPhone. Microsoft will spend a lot of marketing bucks on Win7 tablets, but those won’t be ready for prime time, either. Windows 7 isn’t really optimized for touch. It requires more horsepower to run than Android or iOS, so that means either higher prices, lower margins, or crappy performance. If tablets really takeoff it won’t be a good thing for Microsoft.

Meanwhile, Google has become the new Microsoft.