Internet Explorer 7 is Garbage and Microsoft Doesn't Care
Really, the truth of the matter is that the release of Internet Explorer 7 is a red-herring. When you look at it, it is clear that Internet Explorer 7 has a few bug fixes, a couple of interesting features mostly related to security, and PNG transparency support. But these are things that it shouldn't have taken the biggest software company in the world several years to implement. They could have, and probably did in a few months.
Follow the money. It is simple, Microsoft wants building web applications to be complicated so that they can sell Visual Studio, which I like BTW. It is related to the problem with monopolies. They sell you the car for cheap, but if you want the wheels, you're going to pay through the nose. Also, it slammed Firefox's adoption rate. Before IE 7 Firefox was going like gangbusters, but afterward it slowed, why?
The biggest reason that Firefox's adoption rate slowed was because the visible features that Firefox touts, such as tabbed browsing, was embraced easily by IE 7. Also, having a *new* browser like IE 7, makes people using Windows XP feel like their web experience is shiny again. They would have little to no reason to switch browsers. In many of the numbers I've seen from several sites, IE 7 has passed Firefox in total number of users. This forces developers to work to make their sites work with IE 7, and often to make them not work properly with Firefox. If we have to make that choice, we will always choose to make it look / work right in IE because 87% of the people use the sub-standard browser. As long as they release some browser every-time Mozilla releases one, the market will fork further. I'd even argue that the market will slant further toward Microsoft with WPF/E and Vista.
Some people would argue that the numbers reflect that Microsoft rams IE 7 down XP users' throats. I'd argue back that just because it is on the system doesn't mean that anyone has to use it. Really, it is so prominent, and the marketing campaign so slick, most users fail to see Firefox as the most flexible browsing option with the most ways to extend it. Firefox in and of itself is a pretty bland browser from the user's point of view, but once you start adding extensions, it becomes quickly apparent that it is the best. I'd advise the Mozilla Foundation to start creating bundles of Firefox with the 10 most popular plugins as the prominent option for users.
Microsoft has been completely successful in their Art-of-War like approach to the problem. They had an enemy massing on the other side of the hill. Instead of directly crushing them, in which they would gain press, and where Microsoft would be the bad-guy, they instead have employed the principle of deception and are obfuscating the battlefield. They have also, in one act, forced Mozilla to treat Firefox as a browser, instead of the platform that it really is. In the final analysis, it really is the ultimate vector for cross-platform application development. The result of this is that Microsoft's enemy is engaged in chasing its proverbial tail, thinking about Microsoft instead of how to nurture the development community around Firefox, judging by the features slated for FX3. How could Mozilla not think about Microsoft. When Mozilla releases FX3, Microsoft will spend .0001% of their personnel and budget to release IE 8, with yet further crappy adoption of standards, to even further fork away 80 something percent of the web application consumer market.
I don't hate Microsoft, in fact, I admire them in some ways. As a corporation, their mastery of battle tactics is impressive. People will probably say that to crush someone so small is no demonstration of strength. I would argue that they are doing exactly what they should do, they are defeating their enemy without fighting as a true disciple of Sun Tsu would. It's just a shame that innovation has to suffer as a result, and that I have to do the same work more than once.