"A similar miscalculation led Microsoft to treat Netscape as a mortal threat and into a self-defeating tussle with a reciprocally purblind Justice Department. The Web did indeed create enormous opportunities that were seized by companies other than Microsoft, but Microsoft is still around and doing fine."
That is some serious revisionist history going on there. The author seems to forget that Netscape was a huge threat to Microsoft. Microsoft then shifted their strategy to focus on the web in, what I would argue, is one of the more impressive pivots by a large company. That pivot led to Internet Explorer crushing Netscape and becoming the number 1 browser. It also led to a radical reinvention of the Microsoft developer toolset to focus on the web - ASP, ASP.NET, etc. These technologies may now be passe, but they were pretty cutting edge at the time. And even though Microsoft has now, in my opinion, fallen really far behind in the world (missing most of mobile, etc), you can't say that it was a miscalculation to go after Netscape - think of where they'd be if they'd not gone after them.
I feel the only reason that Netscape was considered a threat by Microsoft was because Microsoft made them into a threat to be dominated and crushed. It's true that Netscape was working on things that could have potentially lowered the value of the OS market but that wasn't just Microsoft's sole source of revenue. Unless Netscape released products that totally replaced Microsoft's line of software then people, especially businesses, were going to continue purchasing Windows.
You are quite correct it was a hugely impressive pivot for Microsoft, even though they claimed there was no such pivot since the web was part of the plan. Funny that Win95 didn't initially ship with a browser nor did it install TCP/IP by default but they tried to convince people that it was a "web OS" from the beginning. Then they did their typical thing for the time; create a browser that they eventually released for free, then make it required for Windows, start duplicating other Netscape products to undercut them, and then claim it was their intention from the beginning the whole time. Netscape's demise was just a natural outcome of their superior planning and execution. The Dept of Justice eventually disagreed with them but Netscape was already dead in the water by then.
Now, considering that the result of all this was the era of IE6 that we are just now starting to get out of over 10 years later, I would say that the Internet would have been better off without their pivot. Granted the tools you mentioned are nice but there's no reason to think that Netscape, or someone else, wouldn't have done similar things and possibly better since they most likely wouldn't have tied them to a specific OS. These days hardly anyone makes web tools tied to one OS, mostly Microsoft does that.
As for Microsoft, where would they be today if they hadn't crushed Netscape? I would say that, because of the competition, they would have made better products and be stronger overall. Once they crushed Netscape they stagnated a great deal that eventually caused them to fall behind, as you point out. Their complacency allowed others to step in to become serious competitors that finally resulted in the web tools you mentioned.
I would even say that because of them crushing Netscape with tactics, used elsewhere as well, that resulted in huge problems with governments around the world caused them to be reluctant to be aggressive; which resulted in them missing the mobile window. They are just now seriously trying to get into that game.
Of course, most of this is based on hindsight, which is easy to comment on.
"A similar miscalculation led Microsoft to treat Netscape as a mortal threat and into a self-defeating tussle with a reciprocally purblind Justice Department. The Web did indeed create enormous opportunities that were seized by companies other than Microsoft, but Microsoft is still around and doing fine."
That is some serious revisionist history going on there. The author seems to forget that Netscape was a huge threat to Microsoft. Microsoft then shifted their strategy to focus on the web in, what I would argue, is one of the more impressive pivots by a large company. That pivot led to Internet Explorer crushing Netscape and becoming the number 1 browser. It also led to a radical reinvention of the Microsoft developer toolset to focus on the web - ASP, ASP.NET, etc. These technologies may now be passe, but they were pretty cutting edge at the time. And even though Microsoft has now, in my opinion, fallen really far behind in the world (missing most of mobile, etc), you can't say that it was a miscalculation to go after Netscape - think of where they'd be if they'd not gone after them.