Microsoft is coming out with Windows 8 soon. They want it to compete with both tablet and desktop / laptop offerings from other vendors (mainly Apple, and less so, Google).
Microsoft is going to lose the tablet and mobile war. They're too far behind, in exactly the same way Apple got too far behind Microsoft after Windows 95 came out.
Apple has the installed base of hundreds of millions of iOS devices. Apple has that "cool factor" where everyone wants an i device. Apple has developers making great apps that sell well. Apple isn't going to slow down (heck, they're probably going to introduce a low cost 7 inch iPad). Apple is out in the lead and Microsoft is playing catch-up.
I had an interesting conversation with a friend last night. He thinks Apple would be foolish to not release a 7 inch iPad to capture the lower purchase price market that they're currently ignoring. But he also thinks that Windows 8 will be a big hit, most likely first in the "enterprise."
Which seems reasonable, on desktops and laptops. Microsoft already owns that market, making a dent there with Windows 8 won't really change much. It's the tablet and phone market where I think Microsoft will fail (since they have been failing successfully so far for years in these markets). Apple and Android have too much of a lead.
Microsoft made a dent in the gaming industry with the Xbox by spending obscene amounts of money (losing tons on each unit sold initially) in order to gain market share. But Nintendo was trying to differentiate itself from Sony and left just Sony to compete with Microsoft when they introduced the first Xbox. Sony screwed the pooch, it was their game to lose and they successfully lost it. There was a market opening and Microsoft filled it, with bags of money, and that was good enough.
Apple and Google aren't leaving any market openings. Even bags of money can't fill something that isn't there.
Having a pretty UI, a functioning application store, integration with cloud services, and a low purchase price won't change things. People still will want iPads, iPhones, and iPods. If they can't afford those, they'll buy an Android device, or maybe they'll consider a Microsoft device. But the first consumers of Microsoft devices won't be early adopters, they've already all bought iOS and Android devices. The first consumers of Microsoft devices will be the general public and the general public has no idea how to use anything but an iOS or Android device. The general public expects their favorite applications (not just angry birds and Word) to be available. The general public is going to be pissed, and they're going to tell their friends, and Consumer Reports will get angry mail, and then Microsoft will have to come out with Windows 9 where they say (yet again) that they have fixed everything. It's not going to work, Microsoft. You're going to lose.
So, why play the game? If you know you're going to lose, why not change the game? Why not do what Google and Amazon are doing? Why not force the incumbent to admit there's a market they're not serving at a price that requires bags of money to achieve? Why not do a Kinect, game changing (no pun intended), thing instead of a "me too!" thing?
I don't know. Apparently, neither does Microsoft.