In a report looking at the impact Vista would have on video and audio playback, he described Vista's Content Protection specification as "the longest suicide note in history".
He said Vista was "broken by design" and intentionally crippled the way it displayed video.
"The sheer obnoxiousness of Vista's content protection may end up being the biggest incentive to piracy yet created," he wrote.
Enforced
In a response to the paper, Dave Marsh, lead program manager for video at Microsoft, said many of the copy protection systems enforced by Vista were common on all playback devices.
He said Vista did have the capability of downgrading video and audio quality, like other devices, but that it would only be activated "when required by the policy associated with the content being played".
The copyright holders of content on HD-DVD and Blu-ray discs, for example, can insist that the video be played back in high definition only if it is output via a connection that supports the HDCP protection system on a PC and a TV or monitor.
That could prove a problem for many PC users whose graphics cards have a DVI or component video connection which do not support HDCP.
Microsoft said that if picture quality was degraded it would still be better than current DVD quality.
Mr Marsh also denied reports that the degradation would impact all video output, insisting it would only apply to premium content video.
'Very unhappy'
Mr Gutmann told BBC News: "It's reassuring that they are saying that only the ability to playback high definition video can be revoked.
"But if consumers have gone out and paid thousands of dollars on high quality, high resolution, high definition displays and find the content is downscaled or there is no picture at all, they are going to be very unhappy.
"Some of the feedback I have been getting indicates that HD-DVD discs are not playing on some PCs."
Mr Gutmann also highlighted the extra demands put on a computer's CPU to handle Vista's Content Protection systems.
Microsoft admitted that the CPU will be taxed further but Mr Marsh said "Vista's Content Protection features were developed to carefully balance the need to provide robust protection... while still enabling great new experiences..."
Mr Gutmann said it was insincere of Microsoft to lay the responsibility for the increased copy protection systems at the feet of content providers.
He said: "Saying 'we were only following orders' has historically proven not to be a very good excuse.
"If you have got the protection measures there, the impulse is to use the most stringent ones at your disposal.
"In general, some sort of DRM is necessary, but we need to strike a balance. It's very consumer-hostile technology that is being deployed."
