You need to state what D&D is losing market share to.
It's not losing it to another RPG. It's losing it to CRPGs in general - and WoW in particular.
No shame in that. WoW is stealing market share from television, movies, and all other electronic media.
Star Wars and
Star Trek have trouble competing with WoW - its no shame to say that D&D can't.
It's a structural problem. WoW is 30 seconds away. You do not need to coordinate who goes to who's house, etc. It's there - it's a click and a password away. You do not have to find others to play with in order to try it. Insert disc - click yes. Enter credit card or game card code. Off you go.
WoW is a brilliantly designed game. It really is. Blizzard is the only Quadruple A developer and they didn't just hit WoW out of the park - they put it into orbit. It is the pinnacle of success in modern entertainment across all media.
In terms of gaming, when you get into it actually playing it - WoW has a very heavy social element via Ventrillo. It may not be D&D - but to quote Ryan Dancey - it's "good enough".
Ryan is right. Spot on correct.
The only way that "D&D" competes with that setup is to have a MMO of its own - far better funded and far better designed than Stormreach. Stormreach was self-funded on far too little money. D&D needs a dev budget of 45 -75 million dollars and 4-5 years of patience - and it needs to be developed internally with a PnP product crafted to suit it - not the other way around. I know this is heresy here - but I'm not talking about decisions which are going to make EN worlders happy - I'm talking about a business decision that makes sense and is in the shareholders' best interest.
Which is pretty much besides the point to your post, hence "You're wrong".
PnP cannot
ever compete in this environment, unless perhaps the game is dropped off to gamers doors by Eliot Spitzer's preferred casual companions, who will stay an hour or two to close the deal. (Not even WoW can compete with that - in the short term, that is

)
D&D is a niche game that will remain a niche game. That does not make it bad; that does not make it defective and it does not make it broken. It makes it what it always was: a geeky fantasy game that over-achieved and deeply affected the mainstream culture around us in many ways - without ever becoming mainstream itself.
Compare PnP D&D to WoW. D&D is at best a complicated sandbox of tools you need to heavily invest in - and which requires others - in order to make that investment.
WoW is, in contrast, a ready made themepark. It has tons of rides to travel to a mouse click away. The qualitative experience of D&D is greatly different for us who have been playing for 30 years. But for noobs?
WoW is close enough. And there isn't anything you can do to change that. At best, you live with it and do what you can - which is what WotC is, in part, now trying to do.
My only complaint with WotC's handling of things is that they have
vastly more than enough seed capital within Hasbro to have founded their own electronic game studio by now. There should be 350 computer developers at WotC working on D&D titles for the PC, Consoles and handhelds. WoW is the essence of the genesis behind D&D and its customers are a D&D FRPG MMO's natural fanbase. That's D&D's grass that Activision is cutting to the tune of a billion a year.
The reason those customers are playing WoW and not a MMO developed and created by WotC's own internal developers is, plan and simple, utter, complete and sheer incompetence at the highest levels of management within Hasbro. Full stop.
That incompetence has its genesis in the dot.com boom and bust at Hasbro and the horror that was Hasbro Interactive. Hasbro Interactive didn't just have WotC and Hasbro's own IP. THEY BOUGHT OUT MICROPROSE's IP. Hasbro Interactive was a developer/publisher which had some of the best IP in all of gaming.
And they screwed it up. Not a proud moment in company history - but at least it was an understandable one. Shameful perhaps - but not an inexplicable crime. If it was easy - everybody would do it. So for that - they deserve forgiveness.
Then they did something far worse than screw up as new players on a stage they did not fully understand:
they panicked and sold the farm for a song.
The licensing trouble they placed themselves in by selling off Hasbro Interactive to Infogrames continues to echo to this day. They only now appear to be on a plan to get that train back on the tracks. Time will tell if they manage to do so.