I think the first misstep the Free Software movement made was relying on corporate money. Not because "corporations are evil lololol", but because they aren't focused on the what
we care about. For instance, when a webpage is bloated with ads/trackers the website itself is usually relatively lightweight, but has to embed ads/trackers to make money, and the ad/tracker companies don't care about the user experience. Fundamentally, even if the money
ultimately comes from the customer, it comes more directly and more short-termly from businesses, so we focus on meeting business use-cases. So if you cut out indirect payment and get money directly from users, I expect we'll have a much healthier ecosystem.
But let's talk more broadly: Servers. Linux is great for servers. But remind me: who gives a flying fuck about servers? Surely not the FSF, because most real people use personal computers (that means desktop/laptop/tablet/phone/smartwatch/anything else you the typical user can physically unplug/open) and don't administer servers, and on top of that the FSF dislike services in the first place! (See: "service as a software substitute").
People don't have control over enterprise software in most cases - even at the office, your IT department literally chooses what you can do on "your" computer. So why do we have so much free software aimed at business, and so little aimed at e.g. games? Because that's what our money systems are set up to get funding from. Point is, enterprise software being open-source is not an end in itself, it's only useful as a means to an end.
So while corporations can be a useful tool when our interests align, they should not be our primary pillar of support. That should be the actual users, who pay money.
I think the biggest mistake we ever made was leaning into the "free" in free software. It's not as hard as you'd think - let me ask you, why is paying with ads and data-sucking so popular? I'd say, because they're convenient and ubiquitous. Every browser and user on the planet has support for ads/tracking, so every webpage supports them. They make PayPal niche in comparison! They're also incredibly convenient, having zero-click autopay!
Distros should have had payment models built into the OS (available) from the start. There should have been "app stores" selling free software from repositories - it's absurd that selling free software is claimed as a way of making money, but distros do absolutely nothing to accommodate such sales and will in fact undercut* potentially sustainable free software by repackaging it and putting it in repositories gratis, so now there's not even the slight convenience benefit to buying!
Yes, it's legal for a distro to do that. It's also legal for corporations to be parasitic, that doesn't make it moral.
Anyway, move towards patreon-style funding or traditionally proprietary models that take money directly from the consumer. Then you won't see desktops stagnate due to all the money coming from servers.
Relevant xkcd: https://xkcd.com/619/