Tom some extent that is true. There are always development
and research costs. However, the proof is in the pudding about
the tremendous profit returns Microsoft has for the OS and Office
family. It's not like Microsoft starts over too many times, from scratch,
every time they release a new operating system. Vista comes from
Windows Server 2003. Microsoft doesn't have nearly the overhead
costs that most companies do- not even close.
Last quarter (3 month period) those two divisions accounted for
$6 billion in revenue and $4 billion in profit. Incredible.
https://www.microsoft.com/msft/earnings/FY07/earn_rel_q2_07.mspx
Also, hardware companies make their own drivers, they make
their products work on Windows. Microsoft may "work" with
some of these vendors, but its ultimately up to the companies
to make their stuff compatible. Their profit margins are vastly
smaller than Microsoft's.
-Michael