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mft no longer pocketable. FF cameras get smaller and so do aps-c ones. MFT looses some of its competitive edge, at least as far as bodies are concerned. Time to get rid of the adjective "micro" or else compact cameras ought to be called "nano".
Reminds me of cars. The BMW 3 series grew every time a new version came out. It`s now as large as the previous 5 series. The same with the VW golf etc.
I don't think the overall developments are bad for m43.
Yes, APS-C and FF cameras are getting smaller, and yes, Panasonic and Olympus have recently introduced some larger cameras (the GH3 and E-M1 in particular), but they're also still introducing small ones (GX7, E-PL5) which share the same sensors as their bigger brothers. And these latest sensors, incidentally, are closer to contemporary APS-C performance than the sensors of early m43 cameras were.
So whereas the body size advantage is indeed decreasing (mostly due to the shrinking of larger-sensored cameras), the sensor performance disadvantage is decreasing as well. I don't think they'll ever be at the same level, simply due to the difference in sensor size, but then the performance of all these cameras will very soon reach the point where it's more than enough for 99.9% of the enthusiast photographers. The shrinking of camera sizes can only go so far, and with all else being equal, larger sensors will always require larger lenses.
So with all cameras soon being "good enough" in terms of sensor performance,* and m43 inherently having a lens size advantage, the question is whether the larger-sensored camera+lens package will also be considered "small enough" (assuming that a smaller overall package is considered better), or whether consumers will appreciate the size advantage that the overall m43 package retains.
By the way, I'm not sure if the faster lenses that m43 requires to obtain the same shallow DOF for a given FOV increase the lens to comparable (or even larger) sizes than the lenses for larger sensors, so if shallow DOF is the objective then both m43 and larger sensored systems might be about equally large, and the sensor performance of both will be good enough, meaning equal cameras in terms of both quality and size.
*I'm sure that even once this is the case, marketing people will be able to fool people into thinking they need a larger sensor to make good photos, but those consumers who take time to inform themselves will see that even fairly small sensors will have low enough noise and high enough DR for nearly all purposes.