While Microsoft has a reputation for being a colossus, immune to competition, they have played "catch up" a number of times when smaller competitors have snuck under their feet and eaten almost all the eggs out of their nest.

Bill Gates almost missed the internet browser train, and only got ahead because Netscape decided to rest under a tree like the famous hare racing the tortoise.

Even now, Internet Explorer is having to beat back some hot competitors.

In the software industry, the market forces work even better than in older types of industry. A competitor to a car company has a hell of a capital hump to get over to go after GM. A competitor to Microsoft can be started in a basement.