I don't know how much market research MS did before the launch, obviously we're not privy to that kind of information. I do imagine though that they thought there would be a lot more support than they got. Perhaps they banked on Sony having some kind of DRM and they thought their version was better (I have heard rumours Sony's lack of DRM was a relatively last minute decision). Perhaps they just thought gamers would love the idea of something like Steam on a console?
I am prepared to support MS however, even more so now that they have changed. Why? It shows they are willing to listen to their (potential) customers and change as needed. You can blast them all you want for their initial policies, but it takes guts to admit you got it wrong, and to make changes based on that. Yes, the pre-order figures likely had a lot to do with that, but those pre-orders are simply a business way of us as consumers saying that MS got it wrong. They saw the numbers, they read the articles, they saw the backlash, and they changed.
Considering you're blasting them here both for their initial policies and for changing them however, you do seem to be proving the point that MS are damned if they do, and damned if they don't.