It's doing pretty well, I think. We've got several companies consistently producing high-quality games either exclusive to or primarily marketed and designed for the PC, such as Valve and Blizzard. Games on the PC might not sell as well as games on consoles, but the controls can handle so many more types of games than consoles can (RTSs being the big one) and companies are fairly confident in it anyway, so I see no problem with the PC market at all. It's not that PC gaming is dying, it's just that console gaming is even more popular.
As much as this makes me sound like a PC fanboy, I do own several consoles, modern and older, and enjoy them all.