To take on the beast would require money that only Gates/Balmer/Allen/etc. has. That means that one would require "venture capital". But as Stewart Alsop testified before a Senate hearing, before Win2K shipped iirc, there is no way, even in the heyday of the late 1990's that anyone with a plan for an OS could possibly get funding.
It is no coincidence that Linux emerged as the singleton competitor: if you had a better idea for an OS and you tried to play by conventional capitalist rules, your air supply was cut off before you could draw your first breath. It had to be a grass-roots, community effort outside conventional bizness.
And don't underestimate MS's intellect. There are some very smart people working for them. Misguided, yes; Greedy, yes; Hell bent on world domination and equipped with a "take no prisoners" attitude, yes; ethically and morally challenged, yes; but stupid, no.
Edit:
Actually I have seen quite a few people using "Active Desktop." When I visited a friend working in the Charlotte office of Microsoft, nearly everyone there was using it.
bcnu,
Mikem