Microsoft has decided to fight back. Faced by a resurgent Apple and a new innovation almost every week from Google, the global computing giant has been hard at work on some innovations of its own.
And about time too. Windows XP is already five years old and at least another year will pass before its replacement, Windows Vista, is ready for release to the public.
In the meantime there's been little sign of new ideas and new innovation from Microsoft.
Which is hardly surprising, because it makes huge profits simply by maintaining Windows and Office releases, and licensing them all over the world. There's been no need for innovation.
Not until now. Microsoft is facing more threats than ever before.
Apple's OS X operating system is widely regarded as a much easier and more secure option for most people, and a new version has been released about every 16 months. Since switching to a standard Unix base, it is no longer the walled garden it once was, and the criticism that "there's not much software for Mac" simply no longer applies.
Elsewhere, the web giants are starting to stir. Google, of course, is ahead of the pack and already offers the superb Gmail service. But it is working on much more, and clearly intends to offer users a complete "web desktop", an online store for all their email, files, and applications.
If Google's plans work out, it will no longer matter if people are using a PC, a Mac or a mobile phone. Their data will be stored in Google's massive databanks and will be accessible from anywhere.
With all this to deal with, Microsoft needed to act. One thing it has done is to open its own internal workings to public scrutiny, encouraging staff to create their own weblogs and document the work they're doing as it gets done.
As a result, the internet community has watched the gestation of Windows Vista and of one of Microsoft's most eagerly-awaited software products, Internet Explorer 7.
Another upstart, Firefox, has been stealing away users of Internet Explorer, offering them better security and more features. It's taken a long time to respond, but now that IE7 is nearly finished, it finally acknowledges the faults of its predecessor and has gone some way to rectifying them.
The new IE7 beta version (which is available for down-load from microsoft.com) includes tabs (a popular feature of Firefox), and can zoom in on web pages making both text and images larger.
IE7 is one innovation. Origami (origamiproject.com) is another.
Due to be announced this week, it is a new design for a touch-screen tablet computer, bigger than the PDAs and smart phones we've become used to, but smaller than the first generation of tablet PCs that were too heavy and cumbersome for most people to carry.
Origami is expected to be produced by several different manufacturers, just as the Windows-powered smart phones have been, and each model will have slightly different features.
It's the new size that makes a difference; this is being touted as a machine that will fit in a handbag or a student's rucksack. A laptop for everyday use by anyone, not just for business people.
Perhaps Microsoft hopes it will catch on the same way Apple's iPod did.