How can they compete with other browsers when IE is so...poo?
IE is shipped within windows, it is the default browser on this OS.
Using firefox or chrome requires more knowledge and the extra step of installing it, a step that mainstream consumers are not necessarely aware of/willing to take.
Is IE out-of-date?
On most points, I guess IE can be considered as under developed/late. But for the reason evoked earlier, It still has some large spread rate.
Some countries have even based their banking system on IE6 !
Do you use Firefox or Chrome?
I have both installed. FF is my main browser though, and the recent version 12 appears to make HTML5 games run far smoother.
Google was generaly advised so far, but the bugs that have been raising consistantly considering HTML5 gaming and FF catching up on fluidity, requiring less memory etc... will surely change this.
I don't use IE at all.