Microsoft CEO Steve Ballmer earlier this week walked financial analysts through the company's annual mid-fiscal year update on its strategic thinking, striking a bit of a conciliatory tone but making it clear he's organizing to fight.

"You don't beat it. You manage in this environment," Ballmer said. "We need to then really ask the question, what do we invest in, what's important, what's going to happen."

What's going to happen, experts say, is that Microsoft, as always, is going to be on the offensive with its extensive line of products and business interests ranging from Windows to Xbox.

Ballmer speak

"This is Ballmer saying we think our strategy is working and we are not going to change it or the areas of investment," said Matt Rosoff, an analyst with independent research firm Directions on Microsoft. "They look at this as time to expand and take share from companies that are weaker fiscally. Microsoft has cash, they have incredible profit margins, they are doing pretty well."