The main issue for Microsoft is to cut the bulk of its system. It's getting to bulky. I filled a 120GB partition without a problem and most of it is the operating system taking up that room. Then of course I have other applications I have to run on top of the operating system or else my computer is just a useless machine running Windows Vista. You don't observe these issues on MacOS X nor Linux ... not even BSD for crying out loud!

Linux will be dominant when UNIX is required but until then, it won't be too big a threat to Microsoft.

xboxrulz

I too don't think that linux will ever become the more dominant OS, at least not the first 25 years . Microsoft has a huge marketshare and for most people, windows is already hard enough to work with. The windows-just-click-with-your-mouse way of working is the most easy way of working, linux still won't work without using the command line and that's too complex for most users.
The linux user base will probably keep growing, but not in such way that it'll get bigger as the windows user base. Also, don't forget most computer systems you buy in the shops come with windows pre-installed, linux doesn't stand a chance against this marketing trick.