With the recent release of Windows Phone 7, Microsoft has finally figured out what Apple has known for many years: design sells. The interface is austere in a way few Microsoft products are. In some ways it's almost too sparse--users navigate from screen to screen by means of two-dimensional "tiles" rather than 3D buttons. Ultimately, though, underdone beats over-wrought. Granted, "design" is a huge umbrella term, covering everything from ergonomics to user interaction to typography to color palette, but all those things contribute greatly to people's emotional response to a product. Good design makes a product trustworthy. It indicates the level of care that went into creating the product. It has the user's best interest's at heart.
The key differentiator in software used to be features. We thought that more features and more customizability meant happier customers. We were wrong--more features meant customers who were more confused and frustrated. Turns out, in an age of abundance, clarity is a scarce resource. Good design is the conduit of clarity.
Compare the Windows Phone 7 home screen above with the way Windows Mobile used to look:
Mom, have fun figuring out what exactly a "Comm Manager" or "SIM Manager" is.
Mint.com was able to take on a huge company like Intuit (and eventually get acquired by them for $170 million) by competing solely on design and user experience. I never got any direct mail from Mint like I do from Intuit. I never saw Mint.com on the shelf at Staples like I did Quicken. Mint has probably 1/10th the number of features that Quicken has. And yet, in the end. their beautiful design and simple interface added up to $170 million in value.