An eweek.com articles asks Has Microsoft Disavowed Vista? I think the answer to that is probably yes - they cannot NOT realize how bad this is, and it is obvious that the noises being made about how wonderful Windows 7 will be are designed to distract people from that reality.
Personally, I don't think Windows 7 is going to help. Microsoft is too tied to legacy code and legacy apps, and as much as they need to throw all that away and start fresh, doing that will also be dangerous. Losing backward compatibility opens up the playing field like Apple and Linux: if you have to give up legacy crap, why not start fresh with something entirely different? It's been suggested that Microsoft could do this by shipping a legacy free OS plus virtualization with a copy of XP already installed, but although they could obviously do so at a better price point, that's no different than running XP under Parallels or Fusion in Mac OS X or Parallels/VMWare/Xen/thirty others in Linux. It still opens the game to competitors.
One nice discovery from this was the Shipping Seven blog site. This is apparently written by a Microsoft employee involved with Windows Seven who isn't above poking them with a stick or admitting that yeah, he (she?) wouldn't mind owning a MacBook Air. Not a whole bunch of content, but interesting reading. You don't even have to read between the lines to get the idea: Microsoft has big problems and the employees know it.
Of course the employees (or at least this one) think that things can be turned around, that Microsoft can reign forever. I don't. I think it's getting closer and closer to the end of Microsoft As We Know It.
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