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You raise very good points DJMaze. Some of the issues you pointed out are mitigated by different markets though.
In the high end graphics software area Linux actually has two advantages
1) a lot of companies write and maintain their own application and the rest buy from a hnadful of vendors
2 )the majority of consumers in that market used to be heavily invested SGI hardware which ran IRIX.
Because there was a huge demand for IRIX ports of stuff if you wanted to sell to the "industry" graphics software was wittento live in a unix world, which in turn made it trivial to port to linux.
Now once you step back from the table and say - okay, I've got my software and drivers out of the way, it becomes an argument about usability. If we were talking baout the gaming market with none of those perious advantages we would indeed be stuck in the chicken/egg situation you described because there is not and probably will not for the forseeable future be a strong enough linux game consumer market. (A fair number of console game developers are actually unix shops)
In terms of actual usability Linux is at the same level as windows for the majority of a user's needs and exceeds it in a few areas (system stability and security). Where it fails to shine is in support for third party binary software (because of the problems DJMAze described) though standardization initiatives are working on this. This is a secondary issue to usability though since the kernel supports most hardware out of the box and the install programs for most modern distro's can set it up correctly and provide visual config dialogs.
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