Two quibbles here:
-- Online music: It's true that MSN Music is sucking wind. But you need to separate the MSN Music service from the underlying MS DRM and WMA codec technology that underlies _every other_ online music service (Napster, Rhapsody, Yahoo). Yes, iTunes has a bigger share than these other guys, but the use of the MS technology platform here gives them a foot in the door.
-- Search: MSN Search has 20-30% of the online search market, behind Google and Yahoo. Being spanked, yes, but people have counted MS out in the past (remember the original IE -- built by Spyglass -- was terrible) until 4.0.
A look at Microsoft's prospects for the future