XmlHttpRequest is an awesome innovation from the point of view of the software development community as a whole. But from a Microsoft shareholder's point of view it was a disaster. XmlHttpRequest and ContentEditableDiv (known back then as DesignMode) ushered in Web 2.0 and Web 2.0 ended Microsoft's dominance of the software industry by making Windows irrelevant.
As one of the very first outsiders to actually use MSXML in a project (with the Usenet archives to prove it), embracing it when the first betas came out...
...not really. The web was just starting to become active and interactive, and there was a huge pent up need for this, and actually dozens of disparate solutions. The most common was simply using a hidden frame (security controls were vastly simpler), or a Java applet for the comms. Microsoft provided a widely released solution just as the industry was bursting with need, so it go embraced, but if they didn't other options were quickly poised to fill the void.