"I doubt everyone will abandon their word processing software and user Etherpad."
They will probably give up Word for something, eventually. Especially among the current generation, writing is something done online; a blog, an email, a tweet, writing on someone's wall. At some point, it stops making sense to have a word processor distinct from the web. Right now, Word has more features that people like than online writing tools, but that will change over time. Online writing tools are a more natural fit for collaboration and integration with words' final destinations.
Microsoft could make the online tool that replaces Word, but it is probably too dangerous to their current revenue stream. I don't think they can get the same revenue for an online version of Word, and it would be difficult for them to rationalize trying a new business model that may never regain the revenue they get now.
(And yes, I'm basically just making the Innovator's Dilemma argument for word processors.)
