They could do what Apple did and provide a Windows compatibility layer which gets progressively more buried as old software gets replaced until it's just kept around for the weird stuff that never gets properly updated because it's maintained by a rotating set of undergrads.

They tried that with the App Store stuff. That was supposed to be the new world. But it wasn’t compelling, the store sucked and still does today and it was and still is like wading in excrement working on that side of things.

Then it seems like a problem with execution rather than a fundamental problem with the concept.

Especially with Apple as a largely successful counterexample.

Oh yes exactly that. It's a terrible execution of a good idea.

That’s why I qualified with a comment on an LTS version of Windows.

Keep something around for the next decade (or two) that keeps old hardware running. Allow virtualisation for everyone else.

It does seem that Apple’s approach of aggressively throwing out support for features while designing their own silicon with none of the legacy support that Intel keep around for x86 has paid off. Rosetta 2 ‘just works’.

For enterprise, some version of Windows will probably always be needed. WSL has shown that MS can respond to the developer community and shows that they can do it well. For home users and gamers a fast and lean OS will help shift hardware. The former who will be tempted by Macs and the latter who don’t want bloat will want as little OS overhead as possible.

They could build a completely new OS and keep the compatibility with a compatibility layer like Wine.

Somehow I doubt the New Microsoft will do it right though. They don't strike me as the kind of people who give a shit about compatibility and user experience the way Old Microsoft did.

Apple had no issue with virtualizing Mac OS Classic, and people were in an uproar when this went away.