Google Vs Microsoft: is it beginning of end for MS

In its history, its been n th time this question has been asked. Will microsoft survive onslaught of google. I am firm beleiver in Microsoft. But a trend i see changing is that the better minds find google more glamourous to work for than MS. Thats a warning signal. Unless microsoft comes up with some 'next big thing' which in recent past have not been so prominent.
Google believes future in cloud computing as their big thing.
What is cloud computing? Lets get google ceo Eric schmidt's explaination:
He thinks 90% of computing can be done using this web based cloud as Internet connection speeds become faster and Internet software improves. There are certain amount of things that can’t be done in the cloud, like high-end graphics processing. So, in Google’s thinking, 90 percent of computing eventually reside in the cloud?
Microsoft challenges this in its defense.
Disruptive technologies do not destroy existing market leaders overnight. They do not get adopted by the entire market at the same time. They are not initially a viable option for mainstream users. Initially, they do not even seem to be a threat.
Disruptive technologies begin by providing a cheaper, more convenient, simpler solution that meets the needs of the low-end of the market. Low-end users don't need all the features in the Incumbent's product, so they rapidly adopt the simpler solution. Meanwhile, the Incumbent canvasses its mainstream customers, reassures itself that they want the feature-rich products, and dismisses the Disruptor as a niche player in an undesirable market segment.
But then the Disruptor improves its products, adding more features while keeping the convenience and low cost. Now the product appeals to more mainstream users, who adopt it not because it's "better" but because it's simpler and cheaper. Seeing this, the Incumbent continues adding ever more features and functionality to its core product to try to maintain its value proposition for higher end customers. And so on. Eventually, the Incumbent's product overshoots the needs of the mass market, the Disruptor grabs the mainstream customers, and, lo and behold, the technology has been "disrupted."
Microsoft had been disruptor in past. it claims to have best of both worlds. Claims to have graphics rich desktop applications (office being leader without doubt) and services as well.
I also agree this isn't a "winner take all" scenario. This is a huge market and there is room for different solutions and business models. Look at IBM. They are still a very large and successful company 30 years after they were "disrupted" by Microsoft.
But its not a question of survival but of leadership. thats what the game is all about and i agree to my learned friend anshu's observation that companies are made of people who make plans and strategies and implement them. Google seems to have that as of now... I can put my money there..
More about cloud computing simplified later..