That seems to be the implication in Senior VP Bill Veghte's letter to Microsoft customers announcing the ship date for windows 7 (around about January 2010... all those 2009 rumors needed to be gunned down, apparently) excerpted here in Network World. Of course, he doesn't say "failed" and he didn't send me a copy of the letter (my money not green enough for you, Bill?) so I may be taking things out of context.

But when he says things like ""You've also let us know you don't want to face the kinds of incompatibility challenges with the next version of Windows you might have experienced early with Windows Vista" then it certainly sounds as if much of the trouble was to do with compatibility. While there were some significant programs which had compatibility issues, in my mind they were never at the forefront of the debate over Vista adoption. The question, rather, was more about where the value was and whether it sufficiently exceeded that offered by XP to make up the cost of purchase and migration.

I'm curious now if compatibility and a shipping delay (the other reasons cited for the announcement) are really the big takeaways that Microsoft has from the whole Vista debacle? If so, they're a lot less plugged in over there than I was thinking.