Pre-antitrust days, that would be exactly what MS would have done. But it has been battered and bruised by the investigations and must have sworn to themselves "never again" will they ever devote managerial time to do what could have been solved by an outright purchase.
I think this is a key point. Ballmer has been hogtied with the fallout of the anti-trust stuff. Microsoft can't use it's "installed base" advantage in the same way it once could. We'll see how great Google does once it inevitably faces the same issue.
Actually, I think it is that whether bad memories can get institutionalised. If Balmer leaves, that body of bad memories will be gone, and people more willing to take risks again. We need to remember the software landscape has changed considerably. What might not be permissible of Microsoft in the 90s may now be fair game.
Yes. MS has a massive installed base. If they can't leverage that to get people to use it, they are clearly incompetent.