"For example Office could be attacked by the emergence of more advanced browsers, standards and broadband infrastructure through creating web office."

Could be? My company uses Google Docs almost exclusively now.

plus there is open office as an offline alternative.

when better is free, why choose windows?

inertia? ignorance? distrust?

There are many reasons. Very few corporate P&L holders know much about software, the options, alternatives, benefits, actual TCO numbers, roadmaps, specific business need in terms of software requirements and so on.

In my experience, inertia is the biggie. "We've always done it this way", "we've invested $XXXXXXX in this", "it's all our people know" etc etc.

It's undoubtedly frustrating, but I have found it to be a useful reality check that in the real world, the vast majority of people do not enjoy (?) the same perspective as us on technology.