Adding to this, I remember reading an interview with one of the IE6 devs a couple weeks back where he talked about how Microsoft considered browsers finished after IE6, and basically just disbanded the team. Browsers and web innovation wasn't a goal for Microsoft once they had majority marketshare. They just wanted to make sure their product was the standard for the web, as good or as bad as it was.
That's not fair to say at all. IE6 is a perfect example of complacency in a competitive market from years ago. Their mobile efforts to date are a perfect example of complacency in a competitive market today. They were years late in shipping Vista, years late in trying to meaningfully compete with Google, they've been long complacent with their Mac Office products, and some of their developer tools are atrocious.
You don't get a pass because your internal bureaucracy and politics prevent your engineers from doing their jobs.
Actually you are correct. I think if they had the option to, they would not have been complacent, but all the internal muddling stalled them on Vista (worst project ever) and IE. They only got their teams cleared out in the past 18 months and restructured and there is a lot more to do (Dean Hatchamovitch leads the IE team now, great guy who came in via sysinternals)
So you are right that internal turmoil shouldn't be used as an excuse. I think they know that they can't be complacent though, the Vista slip must have cost a lot of market share to Apple.
At the time of IE6's release it was a fantastic browser. That was Microsoft's problem; it was so much better than Netscape at the time (and had such a bundling advantage) that they totally dominated the market. So Microsoft stopped improving it... and were very slow to realize that they needed to start again after Firefox shook the browser market back up.
There were still people criticizing MS back at the time of IE6's launch, of course. But it was more ideological than practical... the open source zealots, rather than every web developer.
Microsoft did almost zero browser innovation after 6 and until now, whereas previously they innovated. And now they can't win either way.
It just shows that the sentiment the entire time was anti-msft