Quite a few things to mention here.
First of all, although I'm sure that microsoft is seeing a long term decline in windows sales because people are looking at alternatives such as Linux but that's not why they are going out and saying this. They might be trying to attract former microsoft customers back, promising lower prices like "We're sorry, but from now on things are gonna be different" or maybe they have something up their sleeves and are trying to give the free software community a false sense of "were starting to win". Or this could be Microsoft protecting against future antitrust lawsuits (they could use this as an argument that there IS competition in the OS market today).
One thing not noted in the Microsoft filing is that free software is not free in the financial sense of the word. The software itself is free, but it requires service and support. Indeed, the total cost of ownership of Windows is lower than Linux in many applications, according to an IDC report late last year commissioned by Microsoft.
LoL this ALWAYS makes me laugh. When I sit and try to think as stupidly as I can (like a WIndoze user) its hard for me to understand how he/she could get confused with a distro like redhat. except for playing windows games, which doesnt require support, just a good wine install.