There were some fascinating bits covered by Slashdot about the "Windows Vista Capable" labeling, and how Intel pushed for its i915 graphics chipset to be labeled by Microsoft as "Vista Capable" even though it obviously couldn't run the Aero interface, which led in part to the current lawsuit and resulting mess with Microsoft's marketing and product labeling.
I think it's hilarious that this has since made it to the New York Times. :)
- Microsoft Had Doubts About the 'Vista Capable' Label February 12 2008
- Microsoft Internal Emails Show Dismay With Vista February 28 2008
I think ultimately the MS product managers gave into the urge to Ship Something Now rather than fix the known issues with Vista and wait for another 6 to 12 months for greater driver availability from hardware vendors. As it is, both the techie and public perception of Vista (regardless of technical merits or the facts) is the worst for any consumer operating system since Windows ME.
MS should essentially give up and cut its losses on Vista. It needs to release Vista SP1 once it's thoroughly tested and vetted, and then fork off their current Windows 7 development branch to release an incrementally improved version of Windows as soon as feasible to sell something other than Vista.
This also illustrates the project management and business problems with long development cycles. Microsoft has become wedded to the idea of expensive, major OS releases at infrequent multi-year intervals, as opposed to Apple's almost yearly Mac OS X releases or Canonical's twice-yearly releases of Ubuntu Linux with periodic long-term supported releases that get bugfixes and security patches for at least 3 years.
I think that more than any particular competitor, Microsoft's greatest challenge is its own development practices. If any $50bn commercial software company can turn itself around, it's Microsoft, but they need to admit and fix their mistakes.