I haven't been following the whole IE doctype kerfuffle very closely, but I agree with Simon Willison that James Bennett's analysis is spot-on:
There’s only one space left in the market where IE can still claim that bloated 95%+ market share: corporate intranets. But lately the corporate customers have been a bit twitchy; Windows Vista has been such a disaster, with large customers flat-out refusing to upgrade and some even demanding the option to “downgrade” back to Windows XP on new machines, that Microsoft has extended the sales and support periods for XP, which will now be supported all the way out to 2014 — fully thirteen years after initial release
I hadn't realized they'd already made that long of a commitment. It would be interesting to go back and see if that announcement preceded their increase in cheap XP licenses to the developing world.
It is hard to underestimate how much of a drag this is on Microsoft. Maintaining backwards compatibility is a massive pain in software development. SchoolTool has essentially dropped the open source axiom of "release early and often" because maintaining backward compatibility with early releases being used by a dozen people is just crippling for a small development team. Of course, Microsoft has lots of money and developers, but also vastly more complex software, so it is still a big burden.
Just for comparison, imagine if Apple supported Mac OS 9 for seven years after the release of Mac OS X. They would be phasing out OS 9 support this spring. Can you imagine Apple limiting themselves to features that would work on both versions? No. Can you imagine them adding features to OS 9 all this time? No. Can you imagine them maintaining two separate versions of all their apps? No. Microsoft is facing that choice for six more years.
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