They are dead in the sense that while they still keep their old monopoly, it's slowly crumbling away... Files in word format can be read on almost any plateform now (maybe not always perfectly but still good enough) and the file formats for texts or other things will change as people start using new software (web applications).
As a matter of fact, you can see the death of microsoft by the fact that it's not a problem to run another platform anymore (in 90% of the cases) and that it becomes more and more easier...
It's mostly because microsoft doesn't bring anything new to the table anymore... Before, they didn't really innovate but they often came with really good implementations of good ideas other people had (lotus 1-2-3 - excel, wordstar - word, netscape - internet explorer) and took the market. They don't seem to be able to do this anymore
Microsoft is now a nuisance, not a competitor. They can make business painful, but they aren't scary anymore.
MS Office is clearly under serious attack now, and I'm sure the OS will follow in a few years unless MS takes a major tack in their business, which seems unlikely but is possible. If you are a top-notch programmer brimming with big ideas, do you want to work for MS? Probably not, and I think that is the biggest barrier they have to succeeding in the new web world. You can buy programming mercenaries with enough cash, but the genius paradigm-shifters will be hard to find over at MS.
Last time I checked, none of the online web two point ooh software can open big documents. These web-apps only match probably 20% of MS Office features and it's simply not enough these days when people are more tech-savvy than in the past.
Evolution:
-Mainframes as the computing platform (IBM)
--- PCs as the computing platform (Apple)
------- the OS as the computing platform (MS Windows) (Where Apple missed the boat by only offering their OS on proprietary hardware)
------------- the Internet as the computing platform (Google) (where MS will probably miss the boat)
every time I fire-up and use OpenOffice, I hear the 'cry' of another microsofty programmers` heart, breaking in two ... guess I fall in the second half.
1. It's free
2. It can read all Microsoft and open formats
3. It can export as PDF
4. It runs on Windows, Mac, Linux, ... (written in Java I believe)
5. It's open source
6. Various other features have been added which MS now adds to MS Office in order to catch up (like auto-completion).
I totally agree that there's this very small, very insular part of the world that thinks it's dead, but that part of the world is apparently not working in large companies, or trading files with professionals in any profession other than design (e.g., try to find an Architect using Mac-based software -- they can't, because they couldn't trade files with each other or clients).
I'll believe MS is dead when they have, say, less than 70% of the world's computers running their operating system and when my corporate clients stop asking for files in Word format. Until then, they're just a monopoly that has massive amounts of power but that the cool kids aren't interested in.
It's like saying POTS telephones are dead -- they might not be interesting, but that's a big difference from being dead.