Tiny companies? 120,000 employees is not tiny. You have never heard of them, but that is because they failed. They were both well-known "blue chip" companies at the time. They didn't see the PC revolution coming and were destroyed by it.

I don't actually think MS as a company will fail anytime soon. They do have their desktop monopoly and Office cash-cow. However, other than the XBox, they don't have a very good track record of getting into new markets. So it is entierly plausible that WP7 won't go anywhere.

In the long run, there is a danger for MS. The world is changing again, maybe as much as it did when the PC came along. The track record of technology companies across a paradigm shift is not a good one. At best they seem to "do an IBM", which is to say they remain large and profitable but no longer lead the market. A lot of signs point to MS heading down that path.

I think WP7 and Windows 8 are their shot at remaining relevant. If they fail they will continue to exist but will no longer dominate the industry the way they have for the last 20 years. If they succeed, it will be one for the history books.