At Microsoft’s 14th annual CEO Summit, Steve Ballmer said something that gives us an insight into what went wrong with Vista. Taking about the operating system, he said: “We tried too big a task and in the process wound up losing thousands of man hours of innovation.” Problem with Microsoft (specifically in pre Windows 7 days) was the company had a huge track record of vaporware announcements. Then there were external pressures.
Not only was Longhorn (project that led to Vista) having to keep up with what Microsoft wanted from it, it also had to keep up with tech industry and changes & developments. Feature creep built on top of feature creep, and eventually the project collapsed under its own weight and Microsoft threw out existing code, took Windows Server 2003 SP1 codebase and added to this “the features that would transform it into Vista”. Overall, Vista cost Microsoft around $6 billion to develop. Microsoft knew what Vista should have been - it should have been Longhorn.