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.