ZDNet posted a news story that Microsoft's Steve Ballmer gave an insight into what went wrong with Vista in his keynote at the 14th annual CEO Summit

Taking about the operating system, he said:

“We tried too big a task and in the process wound up losing thousands of man hours of innovation.”

The problem with Microsoft (specifically in the pre Windows 7 days) is that the company had a huge track record of vaporware announcements. During the development of Longhorn (the project that led to Vista), there was an almost daily flow of announcements and new features from Microsoft. Longhorn was going to be everything to everybody.

  Ballmer: Microsoft lost thousands of man hours of innovation on Vista