Absolutely fascinating article from Terry Crowley on What Really Happened with Vista. Anyone that's been computing for 15 years has certainly seen the ebb and flow of Microsoft being respected to being laughable bad to being back on the rise. So, to read through Crowley's insight on exactly how that journey occurred. It's a lengthy read but engaging from the start. Here's a tiny blurb regarding a bad bet on Internet Explorer:

Also catastrophically, the bet on Avalon had been paired with a major disinvestment in IE. The IE team was gutted to staff Avalon and IE was left on life support struggling to address the torrent of security issues cascading in. The vision was that HTML would be a legacy technology and the kinds of applications our competitors were targeting for the browser and HTML would be built on top of the new Avalon infrastructure.

This was a huge strategic mistake and opened up a gap for the rise of Firefox and then the Chrome browser from Google. Whether continued investment in IE would have prevented that is impossible to tell, but it certainly did not help. It also hamstrung the IE team and left them unprepared and unstaffed to address the continuing rapid evolution of web technologies which degraded IE's reputation with web developers. The fact that it was a mistake was apparent across the company immediately; there was no need for twenty-twenty hindsight. Office and other parts of the company had large investments in the web and HTML. There was no plausible path where those investments would move over to Avalon, much less expecting the entire industry to move. In fact there was never even an attempt by the Avalon team to describe a plausible path - something magical would happen and suddenly everyone would be building Avalon apps instead of on HTML. It was absurd as well as being unconscionable. Immediately after we "won" the browser wars and saw Netscape absorbed by AOL, we radically cut further development in these open standard technologies. It was not until Windows 7 that we re-staffed the IE team and restarted aggressive investment in IE and standard web technologies.

As I mentioned, it's lengthy. Oh, and it's nerdy and technical. But having a high level overview of what happened through the stages of Windows 95 to XP to Vista is well worth your time.