Clearly, competition is good in the long run. But unbundling may actually punish average consumers in the short and mid-term.
The whole premise of the Institute's argument seems to be that forcing unbundling would somehow immediately give customers better choice of what to buy and force interoperability, and it explicitly excludes the Mac from this equation because it is a "premium, niche product, like a Bang and Olufsen television." None of those things makes much sense.
Let's take the Mac thing first. A Bang and Olufsen television has diddly other than great design in common with Macs. The Bang and Olufsen BeoVision 9 50" plasma costs $19,900 online. I recently saw Sears selling a 50" Sony plasma-screen for $1,599.99. That's more than 11 times more for the Bang and Olufsen. Meanwhile, a Macbook starts at $1,999 compared with a similarly configured Dell laptop (same processor, similar drives, integrated camera, etcetera) for $1,509. Sure, that's a mark-up, but it's no huge premium in comparison. Who gets to define what "premium" means? As for the niche thing, no, I don't live in Europe, but the last time I checked, all the Apple stores I've ever visited have been extremely busy.
As for the other argument, who's to say that unbundling will make for more competition? It's going to ultimately be the stores' and manufacturers' decisions on what operating systems to carry and support. That will again be driven by consumer demand. If the Mac is excluded, with what does that leave us? Today, Linux distributions, Unix variants and some really niche-y stuff like AmigaOS and FreeDOS.
Walt Mossberg recently wrote that Ubuntu, probably the most promising desktop Linux distribution today, still isn't for the average user. Even with the option, Dell is obviously not selling as many Ubuntu boxes as Windows systems. As for the other guys, they're complete afterthoughts (no offense to any fans out there). Is forcing consumers to buy the operating system in a box going to change that? Not without marketing and retail deals and better application support.
The Institute argues that consumers would, "given the choice, opt for a cheaper operating system." Says who? Cisco's not doing so bad, and last time I checked, their prices were nowhere near the cheapest. Consumers will go with what works. What's comfortable, easy to use, secure, compatible with applications out there, etcetera. While Windows gets a lot of people complaining, the general public knows it and the applications are there.
What unbundling would really do, anyway, would be to drive the price of a Windows-based computer up, rather than down. Companies like HP and Dell get volume discounts for bundling Windows and that helps keep prices down. Without that, buyers end up paying more for the combined computer and operating system.
It would also add complexity for end users, counter to The Institute's claims. People buy operating systems pre-installed with a bunch of different applications beyond what comes with the operating system. Office productivity apps, security apps, you name it. An uninstalled OS would force users to find and download or buy those apps. That's an added and inconvenient step that would cost hours.
The right answer: push standards, don't force a stupid change in the way compauters are sold.