I think part of the frustration with Austria is that it's a country for advanced players. Many countries can make mistakes and survive to mid-game; Austria typically cannot. Similarly, newer players often grab available centers instead of thinking about balance of power, which encourages them to take apart Austria when they shouldn't. So, at the risk of incurring the wrath of those who wanted to turn this into a non-Austria thread, a few thoughts on Austria in a gunboat game:
1) Your goal is to win the game, and that means getting 18 centers. Geographically, Austria is in a better position than any other country to reach 18 when it grows. Essentially, once you get out of your box, your 18th center might be anywhere in Europe. My most recent Austrian solo ended with me in Sweden, Belgium, and Marseilles.
In other words, the tradeoff for being an easy power to eliminate early is that if you make it to the midgame in decent shape, you have unlimited growth potential.
2) You have two natural allies who make great partners. Both Italy and Turkey profit from an alliance in which they build fleets and dominate the Med and you build armies. Both are partners who can last as allies deep into the midgame, if not the endgame, and yet, when it ultimately comes down to it, *will not be a threat to stop you from soloing*. That's right -- Austria with plenty of armies can build an easy wall against I or T (I more easily, but T if you concede Sev/Rum) and still have the units to reach 18. Remember point 1 -- Turkey can have Rumania, but an A/T race for a solo is going to be decided by who wins the race to places like Belgium. And that's always going to be you.
3) Losing Trieste is not fatal. Treating is as must-retake often is.
Austria, sans Trieste, is a viable power that can grow and can defend against any further aggression. Italian players often take Trieste, but if they go no further, you have a viable game. Remember, your goal is simple: survive to the midgame intact, because if Austria ever gets to about 7 centers, watch out! In a press game, my general offer to an Italian who stabs for Trieste is that if he builds a fleet, he can keep it, and let's take apart Turkey. Italy's never going to get Serbia when you hold a Vie-Bud-Ser line anyway.
4) Galicia is the most important square on the board. OK, maybe 2nd, behind the North Sea. But the point is, basically any war in the East hinges on Galicia, and geography dictates that you control it. Would you rather lose Trieste or Galicia? Trieste. In a press game, A Gal means you have something to offer everybody. In a nopress game, it's still the key position from which you dictate the outcome of any R/T conflict.
5) The Balkans are littered with dots. This means your forces are always going to be more concentrated than any neighbor, and similarly means that there's much more room for tactical flexibility. Any move of the lines forward or backward means centers, and geography typically dictates that you're in the better position. In return, it means Austria isn't for the faint of heart. I've found that there are two types of tacticians: players who start by thinking about what their enemies can do to them and players who start by thinking about what they can do to their enemies. Austria is for the latter. As I've heard attributed to Patton (but can't find a source for), it's up to *them* to worry about *their* flanks.
@brainbomb: Does this mean you'll be able to stop them when your neighbors all want a piece of the empire? No, of course not. This isn't true of any power in Diplomacy. But at the same time, the high density means it's even easier for you to play the last trick in the arsenal of any dying power: die preferentially. Whenever you see multiple powers swallowing you, and can't turn them around, consider what each of them is thinking. Turkey and Italy are attacking you? OK, they probably each expect to get half of your centers, which leaves them in a position to contend with each other. So, you should try to ensure that one of them is gaining nothing, while the other one is gaining everything. This puts a lot of pressure on the power making all of the gains to keep the lesser power happy, and often the lesser power will instead turn around out of necessity. It might cost you half your centers, but half is better than all. In the game you described, you did a reasonably job of attempting it -- the problem, instead, was the Russian CD; it meant that Turkey was able to grow, instead of sitting there and realizing how much trouble a bunch of Italian fleet builds were going to be while Turkey got none.
Anyway, good luck with Austria -- it's definitely not an easy country to play, and all the more so for newer players.