I don't think that their influence is diminishing, however, computer usage (and technology users) have increased heavily to the point, that a giant like Microsoft seemed to lose its' presence.

In the past, you used to have one computer that you share may be with the other member of your family. Now, you have many computers, a smartphone, a tablet and other gadgets (iPod, Kinect, reader...) there are lot of rooms for lot of other companies, so it seems like Microsoft lost, however, it has not.