The IDE itself is dated and no longer competitive with the best of the modern IDE's. The language and API however is updated and productive. You just need to get over Pascal-style syntax instead of C-style, and you are just as productive in it as if you were using C#.
Why is delphi still hanging on?
1. It delivers executables that need no dependencies. No VM's, no runtimes, no add-on dll's. Underneath it only needs x86 and win32 (unless you're building for mac, android or iOS, which it also supports). I wouldn't be surprised if our software still ran on windows 2000. Since the code is native, performance is never a problem even with wildly inefficient code.
2. It lets you build GUI software really quickly. Productivity in delphi for someone used to it matches any "modern" GUI development platform. Sure, the IDE misses a few features that competing IDE's have, but on the plus side it compiles ridiculously fast (a full build of 2 million lines takes less than a minute on a single core).
3. Delphi is the easiest platform by far to have legacy code on, because the maintenance cost is very low. Delphi's contemporaries (classic VB, MFC) have all gone through major upheavals. Delphi has managed to modernize the API's without breaking legacy code too badly (they even managed to elegantly retrofit unicode into the platform). This is why codebases that are based on Delphi somehow never get ported away from it.
Delphi's competitive with other desktop and mobile development platforms, even at what they're charging for it. What they're charging for it is the problem though. Only people already using delphi buy delphi, and so the perception is maintained that delphi is effectively dead, even when it isn't.