And y'know, I'm starting to wonder if the problem is the concept of Windows. Not whether it's well-implemented, not whether Microsoft is good or evil, not whether it is carrying too much legacy baggage, but simply the fact that it is, at its heart, designed to be a monolithic monster of a system. That's the whole point: Microsoft sustains itself by building more and more stuff into the OS, fending off competition by building the system bigger and bigger. And I suspect that that model is now crumbling.
It's fascinating to note that some parts of Microsoft are thriving. Reports indicate that the next version of Office is going to be quite nice, and I know that the programming-tools side is doing decently well for itself. Indeed, what's really striking is that some parts of Vista that were excised into separate, version-neutral projects look like they're now likely to ship before Vista -- and I'll bet they're more solid for it as well. When things are run as separate products, they're still capable of making progress, and even (occasionally) innovation. It's just the giant monster that is Windows that has ground almost to a halt.
I find myself drawing an analogy to the USSR. In the end, the main reason the Soviet Union fell wasn't because it was evil, or because it was imperial, or any of that: mostly, it fell because it didn't work. Central planning doesn't scale: it can work for a small organization, but the larger things get, the more inefficient things get. Microsoft seems to indicate that the same is true of software -- even the biggest, richest software company around just can't run a single project that's this big. Yes, there are many contributing causes, and everyone is pointing the fingers at them, but I suspect that they're really side-effects: I'd bet that the real root cause is that the entire idea is bogus.
Prediction: if Microsoft is still thriving in ten years, it will be because they have broken up the OS, at least internally if not into legally separate units. Right now, it's following the same path as AT&T and IBM, getting sclerotic as it gets bigger and bigger. And like those companies, I suspect it needs to be shaken to its core if it's really going to get healthy again. Ironically, they may have done themselves a disservice by fighting the anti-monopoly suits as hard as they have -- it could have served as just the shock the company needs...