No, he is not saying microsoft is vulnerable, but that no one fears microsoft any more. In the past, if you were trying to get VC money, one of the questions they would ask you is - why should I fund you? Can't Microsoft do this?
That question is not asked today, even as a few years back. I was trying to get a patch management company going, and that 8 or so VCs I met didn't even asked if this is something Microsoft would get into.
And from what I understand, today's questions are more along the lines of - how can you beat google.
Well, you said Apple's board made a mistake - however, I think it was a necessary move. If you think about all the great movements in the history of mankind, Buddha, Jesus, Mohammad, Moses, etc, all of them had to be kicked out, suffer in the desert, receive enlightenment/burning bushes/next/pixar and then come on back as the conquering hero. Would Jobs be as good as he is now, if he didn't do Next and Pixar? Maybe, maybe not.
1) xbox (though, at this point it has not really been adsorbed back in yet) 2) IE 3) MS Office 4) MS Windows 5) MS-DOS 6) Hotmail