The problem for Mircosoft is...
That they want the best of both worlds.
Apple iPad succeeds because Apple use iOS to best show off it's hardware. It's long been acknowledged that much of what Apple does in the software environment, be it an O/S or an application such as iTunes, it is there to push the hardware. They are are a hardware company for whom the software component is an enabler.
The success of Android is that Google doesn't mind if somebody skins it an makes it more of their own. They ceded control of the look by allowing Blur, Touchwiz and Sense and then learning from those to improve the core UI. The Android specs aren't also locked down like Microsoft have done, give vendors flexibility and the market will decide who has produced the best device. Once the market has decide what the spec should be (Nexus 7, Kindle Fire, Nook HD etc) then the manufacturers are happy because it was up to them to find their own way.
Microsoft are a software company so unlike Apple their software has to be awesome on the hardware. Instead of taking the Google approach, they thought they could be like Apple and pissed off everybody in the process, vendors, buyers, developers - the whole gamut.
Either you own the process from start to finish (Apple) or you let the market shake out how things will be (Google) you can't do both.