I think the main problem for MS is that while Apple makes a premium product, and is oriented around consistently turning out products that deserve their reputation, MS is not. Lose the perception that running Windows is Inevitable, and they don't have to turn out good products just once in a while, but almost every time.

When you add Linux snapping at their heels with a free desktop, I think they've got real problems. Especially when Shuttleworth is calling on Linux developers to make something prettier than OSX. They won't necessarily succeed, (although I hope we do), but simply playing in the space greatly complicates Microsoft's issues.

Yeah I think Windows 7 is a chance for MS to push premium and take down the "big bad company" image a notch (as they've done with ASP.NET MVC by interacting with the community and including well known developer figures in the project).

I'm not sure Linux will ever pose a serious threat to the "home-user" market - even developers I know tend to agree that Linux has never taken user-interaction seriously. It might be prettier these days but that isn't the concern, it's genuine "getting things working" and "using this day by day" that is the problem. Most Linux users live by the terminal but home users moved to the GUI a long time ago and aren't going back.

Linux will continue to steadily grow among home users if Windows 7 doesn't provide better security than Vista. People do get tired of reformatting their (or their relatives') machines every 4-6 months to get rid of all the sticky malware that managed to get past their antivirus, even though said antivirus has been eating large chunks of their memory and CPU time.

Vista doesn't have nearly the security problems of the XP and before systems. Things like not running as root and integrity levels changed the security landscape. In addition, I believe that in between XP and Vista they rewrote much of the internal code to be more secure.

you're right that it is a huge chance for them. going by history I see no indication that they won't completely blow this chance while declaring victory. microsoft has become myopic.

I have to pick one nit with your comment ... Linux developers miss the point if they think making "something prettier" is the answer.

OS X success is not about "pretty", not in a fonts, colors, and visual design kind of way. I'd warrant Vista is much "prettier" in that regard.

What is "pretty" about OS X is the capital D design of the overall user experience. Achieving this requires deep integration of goals between developers, ui experts, product managers, and yes, visual designers.

Otherwise it will only be like, shall we say, lipstick on a pig (a very tasty and fine pig, or good pet pig if you aren't into the swine flesh, at that).

Yes, I agree. I was using "pretty" as a catch all phrase for the je ne sais quoi that makes an OS a pleasure to use. Just piling on the eye candy is never going to get there.

On point 1, are you arguing Microsoft should say that Win 7 is superior to Mac OS X, or to previous versions of Windows?

The first argument would be terribly hard for them to win, but the second they might be able to credibly argue. I don't think there are many who dispute that Win 7 is better than Vista, the only issue is if it's better than XP. That likely depends partially on the hardware you run it on.