In light of smaller and more innovative competitors, Redmond has been made looking like it's not merely standing still, but taking steps backward. That's how fast the market has been moving.
Still, it looks like MS is trying a different route here. Just today, it signed an Office deal with Nokia. But what's interesting is that at the press conference, the first question was about Apple.
However, the threat to Microsoft, at least in the context of the press conference with Nokia, is RIM and it was encouraging that the answer acknowledged that.
Still, I was hoping Bing would be part of that deal for Microsoft. I am sure in the coming weeks with the release of Zune HD, we might see some more concrete fight from Microsoft and a mobile road map.
Source: CNet (live blog going on).
Note: I'll post more on that later.