[wolfgke]

> Due to piracy, a company can no longer just release an incremental update of their software package every couple years.

In earlier days (before Microsoft introduced much stronger copy protection schemes, such as the necessity to activate the products or WGA) a lot more installed copies of Microsoft products were illegal copies (in particular on computers owned by private users). And Microsoft survived quite well. So if you really believe in the "piracy explanation", you are deeply brainwashed by rightholder's propaganda.

The IMHO most plausible reason why the model worked in former days, but worse today (though "worse" is probably a really bad word: revenue today is surely still much larger than in the former days), is that as long as Moore's law correlated to increased speed for existing applications (without need for new programming tricks such as having to use multithreading, new SIMD instructions etc. in the programs to make use of the additional power of new processors), there was a good reason to buy a new PC every few years. With each new PC there came a new OEM version of Windows and sometimes some Microsoft Office applications. So the formerly existing correlation between Moore's law and speed for existing applications drove Microsoft's sales.