Mark;
There was way more to it than that. Microsoft *knew* that people didn't like Vista, but they wanted people to upgrade anyway. They *intentionally* (and prematurely) pulled the plug on XP for new machine sales. Dell, HP, Gateway, and several other computer manufacturers agreed to only offer Vista on their machines, much to the chagrin of their customers. (In fact, even Dell only agreed after much wrangling, and the threat of loosing their coveted status as a Vista-certified supplier.)
It took over 6 months of constant complaints by customers before Microsoft reversed their position and allowed these companies to offer XP for "mission critical" machines. Once word got out, you had people calling the Dell server center trying to order a desktop, just because that was one way you could get XP instead of Vista.
These days it's gotten better, as Microsoft has finally realized that 1) Vista has issues, and 2) *many* users still prefer XP. (And not just system admins, but ordinary folks as well.) So now it is possible to find a few new machines with XP. But they're still rare, and often you have to ask for it specifically. (Many Dell models, for example, are still available with Vista only. They typically have just a single line in a given category that ships with XP, and it's usually a lower end model.)
It's not *just* about profit. It's about Microsoft wanting to control the direction of the dominant desktop OS. If you think about it, the development cost for XP is paid for. So XP sales are pure profit, minus the cost to stamp the disc. They should be selling XP like crazy! But XP lacks some features that Microsoft *wants* to put on your desktop, whether you want them there or not. Thus Vista was born.
Granted, they charge more for Vista sales, so you might think there is a greater profit margin there, but Vista is saddled with huge development costs that eat into the profit. So the whole "it's all about market forces" is really not true in this case.
If you follow the tech news scene, you'll see that Microsoft only reluctantly brought XP back after extreme pressure was applied by the user base. There was a *lot* more to this story than just maximizing profits.
Adam