Government's action did had zero effect against Microsoft. Slap on the wrist. Their monopoly was naturally made irrelevant by the market moving onto the next tech frontier: mobile & cloud.
The free market lead to that. Countless startups trying everything under the sun made sure incumbents like Apple or Google had to innovate, acquire and evolve to avoid Microsoft's fate. In a free market there is always a chance a new startup will spring up and upend the order. Tons of VC money are continuously trying exactly that.
Apple survived thanks to Steve Jobs and Steve Jobs alone. He could've built his vision in any company or startup though, when he took over Apple was a few weeks away from bankruptcy.
Without Microsoft Office and Internet Explorer, the Mac would have been dead. Gil Amelio negotiated their continuation (as settlement for the old Look & Feel and QuickTime lawsuits) with Microsoft and Jobs closed the deal by letting up on some of Amelio's demands. Microsoft could have just said no and the Mac would have been useless to both education and business and they would have been dead in weeks as you said.
NeXT would never have built the iPhone, they had given up on hardware.
It’s not possible to know what other factors would’ve or wouldn’t have come into play, who would’ve done what else in this alternate history of yours. It’s just speculation.
Indeed, maybe Microsoft would’ve created an even better smartphone, putting us today in a position with 3 major competing mobile platforms! And just imagine what else after that…
The free market lead to that. Countless startups trying everything under the sun made sure incumbents like Apple or Google had to innovate, acquire and evolve to avoid Microsoft's fate. In a free market there is always a chance a new startup will spring up and upend the order. Tons of VC money are continuously trying exactly that.