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All of those examples you gave are of something being overtaken by the next generation. The problem is that what Microsoft is going to make ISN'T next generation, its the same thing as an iPod, whereas Apple is already working on the next-gen iPod.

Microsoft's iPod equivalent is at the same stage in its development as the current iPod's replacement is at Apple. That's not how you take a market away from someone. Remember, MSN was supposed to destroy AOL, and it's been a flop for much the same reasons. Microsoft Passport? Yeah, that didn't work out so well. Microsoft's Actimates (where they took on Mattel) were a complete and utter failure. Microsoft has a track record of making this exact same mistake (designing to the existing competition instead of designing for the next generation) over and over when trying to make hardware or do something not related to their core competencies.

And FYI, Nintendo didn't have much of an installed base of current-gen consoles after SNES. They pissed it away with N64. And now that the next-gen consoles are coming out, it's pretty clear that the xBox was overrun by Sony's PS2. The xBox360 isn't doing so hot, either.

"All of those examples you gave are of something being overtaken by the next generation"

All those examples I gave had nothing to do with Microsoft "stealing" anything from Apple, because up to today , Apple still doesn't have any of those products or their equivalents on the market.

"Microsoft's iPod equivalent is at the same stage in its development as the current iPod's replacement is at Apple"

Now how would you know that?
From everything I have heard, Microsoft's iPod killer is of an order of magnitude more advanced than anything Apple has in the market.

"Remember, MSN was supposed to destroy AOL.and it's been a flop for much the same reasons"

Is that why MSN has greater web traffic worldwide than AOL?
And AOL is a pale shadow of it's previous self?

"Passport? Yeah, that didn't work out so well"

MSN Hotmail is the biggest email provider on the planet by far.
And MSN messenger is the #1 provider of instant messages on the planet.
Not bad for a "failure" is it?

Historically, Microsoft has done very well when they can leverage their monopoly in the desktop operating system arena. When they move outside of that, they run into problems for two reasons. First, they tend to act like they're a monopoly in the new arena, and try to use monopoly tactics where they won't be effective. For example, if you go to MSNBC or MSN with an Apple computer, or a PC using Firefox, and try to play a video, you get a message that you must install IE7 and Windows Media Player 10. That might be effective if there was no place else to go for streaming video except MSNBC, but it doesn't work in a wide open internet. Second, everybody's seen the shattered companies Microsoft destroyed, and they don't want it happening in their industry.

Gates and Microsoft also have a history of working cooperatively with "partners", then knee-capping them when they're ready to make their move. I don't think they do it as much anymore, but I read complaints from both Lotus and Wordperfect that when they were trying to develop early Windows versions of 1-2-3 and Wordperfect, that MS would give them information about how to make calls to printer programs, screen rewrites, etc., then change the underlying code six months later. They claimed MS knew they were going to make the changes, and already had the new coding in their Office applications, but waited until they'd actually put the changes on the market to notify other software manufacturers, especially those making products that competed with MS. This made competing products look buggy.

Gates made a brilliant move in getting MS-DOS on all PCs, and cutting IBM out of software. He then leveraged that to make MS the dominant software manufacturer. However, MS has never been an innovative company. They've watched for markets to emerge, then used their size and deep pockets to operate at a loss until they ran the competitors out of business. After they dominate a market, all innovation ceases (Note Internet Explorer).

In the office arena, you could buy Office for $99 when Lotus and WP were still viable threats, and MS included free copies of Word with Windows for quite a while. As soon as they'd crushed the competition, Office went to $499 for a new retail version.

Although they're still successful, Microsoft is starting to collapse under it's own weight. They abandoned Longhorn because completely rewriting the OS turned into a quagmire. Now, Vista is XP+, with belated attempts to add OSX features.

They're attempting to address this, and the video "If Microsoft marketed the iPod", created by a MS team, was a cautionary tale to the developers. The announcement that MS was entering the player market shouldn't have been a surprise to anyone who saw this video. MS doesn't do stuff for grins; it was a clever analysis of competing styles in a market they were looking to enter. MS wants to dominate home media, and they're seeing Apple make big strides in that area. They're not particularly worried about the music market, as much as they are the video and movie market. They want to be the proprietary system controlling all the tv tuners and movie services in the country, and they DON'T want an open system. They want everything to be WMV or whatever proprietary format they come up with, and they want you to get a screen that says, "You MUST buy several hundred dollars worth of Microsoft products to play this video" to come up if you try to access content with any other system.

That's their goal. Their problem is that Hollywood trusts Jobs (as CEO of Pixar, he's one of them) and they don't trust Microsoft.