In the general software arena (not specifically OS), Borland and Symantec were category-leading companies who are now a (small) fraction of their former size. Corel owned the Windows vector-graphics space just ten years ago, and they just sold out to some pint-sized venture cap firm (presumably for disassembly and parts salvage).
In the OS arena, you couldn't have asked for a better opponent to Windows than OS/2: it was a generation ahead of Windows (near-NT stability; better-than-Win95 usability); it was backed by a business-friendly and business-loved company; it ran all your Windows software seamlessly (until Win 95 came out); it was cheaper than Windows; it was a simple, drop-in installation from Windows. Yet, it failed miserably, costing IBM significantly more money than Apple has to support such an endeavor.
The software business is brutal, especially when you are going up against Microsoft in its own space. If you asked any of those companies what they should have done differently, I would bet each would say that they needed to insulate themselves more from Microsoft. Apple's hardware base is perfect insulation from MS; it is foolish to give it up.
Look at Adobe and Macromedia's current Mac offerings: does Apple have the support of the Adobes and Macromedias of the world?
Diagnosing cause of death is tough. In the end, the cause of death in most humans is that their heart stopped beating. However, you need to look further than just the immediate moments prior to death to find the real causes.
Quicktime is free, and has been for some time: how many Windows desktops have it?
They wouldn't have Office. They wouldn't have their company home-rolled Windows apps. They wouldn't have that shareware app that they paid for in 1995 and still use every day even though there are better alternatives out there for free these days (because, dammit, they paid for it so it's gotta be better!)
So, no, the vast majority of working individuals would not go out and buy OS X any more than the vast majority of users went out and bought OS/2 when it was a generation ahead of Windows (stability and UI-wise) and had the backing of the MOST recognized name in the computer business (aside from Microsoft).
Not bloody likely. Chop off the market for processors fueled by Apple's consumer offerings, and the G5+ line becomes impractical.
Plus, we're talking about moving to Itanium here; that's going to replace the server line first, then the pro line. G5+ gets squeezed out. Apple can't introduce a new processor instruction set in its high-end lines, have its customers switch over, then say "thanks for funding our development of consumer Itaniums; now, switch back!"
The iApps are not profitable. Especially not if you're going to give them away with the OS. More people using free iApps doesn't give Apple one thin dime.
You don't need your own Intel OS to sell peripherals. Hence the market for peripherals not produced by Microsoft. In fact, Microsoft peripherals don't do astoundingly better than other companies' peripherals in the marketplace.
Also, IIRC, the iPod is doing quite well without an Intel OSX.
Apple could easily open .Mac to Windows users to increase subscriptions. Again, however, the iApps aren't money-makers. Right now, they aren't really ready to be sold on the Windows side either. They would be a great value-add to the OS offering, but, like I said before, Apple has to get a HUGE share of the OS market before it can fund the iApp and OS development further.
You sound like a dot bomber. Single-mindedly pursuing market share has been the demise of more software companies in the past decade than probably anything else.
Apple is setting itself up as a "lifestyle" company. Apple has stated as much itself. But "lifestyle" is not what makes money. Apple is not just a brand: it is a hardware company. Look at other lifestyle companies: would they exist if they didn't also sell a real and tangible product? The "lifestyle" enhances sales. It is not a revenue generator in and of itself!
