It was a confident - some might say complacent - Microsoft that entered the decade.
Microsoft was the PC. Such was its grip on the desktop and laptop ecosystem that it could force OEMs to ship its browser by threatening to cut off access to its operating system.
In quick succession between 2000 and 2001, Microsoft shipped Windows 2000, Windows XP, Office 2000, and Internet Explorer 6; delivered its answer to Java with .NET; and made a radical departure by moving into hardware to take on games-market leader Sony with the Xbox.
Almost immediately, Microsoft paid the price for its confidence. When the internet changed the world, it became clear that the software Microsoft had refined on the desktop and server was not suited to the new world of the online openness. Windows, Outlook, and IE were slammed - and hard - by wave after wave of malicious worms. They hit millions of systems, taking down everyone from anonymous individuals sending email to databases in nuclear power stations.
Next, Microsoft stumbled over what was supposed to be its core competency: building a new Windows. In 2004, it went back to the drawing board on a version of Windows it had been building since 2001: Longhorn. When Longhorn finally shipped as Windows Vista, it was late and so hated that partners didn't support it, customers wouldn't use it, and Windows XP remained the default choice on peoples' desktops.
As the decade progressed, the PC itself - the bedrock Microsoft bet its business and vision on since the 1970s - was surpassed by a new generation of computing platforms that excited developers and users. People became obsessed by netbooks and cell phones, while consumer goods and even cars became computing platforms.
Meanwhile, for OEMs, developers, and startups, the choice was no longer a straight one between either Java or .NET. At least in that battle, Microsoft had a 50/50 chance of winning. But the Noughties became the decade of open source and Linux. AJAX, Apache, MySQL, and PHP/Perl/Python fuelled a renaissance in development. They didn't come with a pricey or restrictive license.
At times, Microsoft's management didn't help the company. Its internet and mobile strategy were always on the back burner to the PC. By 2009, Microsoft was spending furiously to close the gap on Google's huge ads and search market share. Late in the day, it promised a version of Windows Mobile to match Apple's iPhone - a device chief executive Steve Ballmer had laughed off in 2007. The sobering truth was that in two years, the iPhone had robbed functional but boring Windows Mobile phones of valuable market share.