But it did lead to better user experience. Imagine buying an iPhone which was unable to play music and videos or surf the web, and if you tried to do those things it would tell you to go and download an app for it.

The average user doesn't want to have to download some program to listen to an MP3. They want it to "just work". And that's what Microsoft did.

I don't call 2 years between IE5 and IE6, then 5 years between IE6 and IE7 and then 3 years between IE7 and IE8 a "better user experience".

Tell me again how tightly coupling the apps made things better?

For the average user, an included, well-integrated browser makes surfing the web easier.

Even if it's a PITA for web developers like me that they are using an outdated browser.

How? Most applications will work very well using a non-included browser. Chrome works exceptionally well on my Win7 workstation. How would using the bundled browser be any better?

All bundling did was encourage a crappy browser to stay crappy, and infest far too many PCs with malware due to a horrible plugin architecture as well as a lack of security consciousness.

Except it wasn't well integrated. Incompatible DOM events, non-compliant CSS, didn't implement newer standards very quickly, leading to IE only sites, or sites that follow the standard and that just don't work... How dies this making surfing the web easier?

Because on a new computer, the average user could just double-click the blue e and they were online, no EU "choose a browser" prompts.

As opposed to the situation whereby hardware vendors prebundled Netscape (with an icon on the desktop) before Microsoft heavied them into only bundling Internet Explorer?

No, the average user at the time was perfectly content to download an application to play mp3s (WinAmp), surf the web (Netscape), etc. etc. And the notion that Microsoft made it "just work" is revisionist at best.

Right, they could just make innovative products that users would add themselves instead of just adding them in by default.