In my experience, it isn’t as much about brand loyalty as it is about a mix of convenience and damage control.

For as many faults as Windows has, Microsoft would definitely reel themselves in from jumping the shark. Yearly fees could be justified by saying they’re really affordable + you get customer support. Add onto that how entrenched Windows is and how unapproachable the competition is by comparison(seriously, how many computers come with Linux or BSD pre-installed?) and you basically can’t lose.

Sure, there will be a subset of people will switch to an alternative or pirate Windows, but regular home users aren’t the major source of Microsoft’s revenue anyway, it’s businesses that largely depend on Windows.