First off, Microsoft is not going to open source Windows. (I used to say it wouldn't make business sense for them to open Windows. These days I'm not so sure.) I do know that it would take them years and it would be really hard to do legally and logistically. See Zonker's post.
But people keep talking about Microsoft open sourcing Windows and asking why they don't do it. So what would happen if they did?
If Microsoft open sourced Windows under a standard permissive license,
- would we quit working on Linux?
- would we finally fix the blue screen of death?
- would end users benefit?
- would Windows play better with others?
- would any non-Microsoft employees fix Windows bugs?
- would we still get breakthrough projects like OLPC?
- would any of the code get adopted into other projects?
- would more people use Windows?
- would Microsoft still be able to charge for Windows?
What do I think?
- Some Microsoft technology might be adopted into other open source technologies, actually improving their competitors. However, adopting new technology into a project is never easy, so it wouldn't be as much as they might fear.
- The price of Windows would fall to zero. (And few would pay Microsoft for support.)
- Linux usage and adoption would continue at its current rate – it is the best operating system for many uses.
- Free software projects would have to get better at marketing. (They're being used because they are good technology, not because they are free. But most marketing hype is around free.)
- None of the current open source developers would move to Microsoft projects. Any community built around an open source Windows project would be a new-to-open-source community so it would have growing pains.
Ok, now back to work. Microsoft is not going to open source Windows and if they did, the world wouldn't change … much.