Microsoft barking up the wrong UI
Microsoft is caught between a rock and, well, Windows. In its ongoing pursuit of maintaining the relevancy of Windows, Microsoft has bolted its floorboards to a mouse-centric UI - all the while the world is moving towards touch-centric UI. Trying to adapt Windows to a touch-centric low-resource environment is like Formula 1 racing with a dump truck.
Driven by the never-ending desire to avoid "cannibalism" (having anything at Microsoft compete with Windows or Office), Microsoft has deftly avoided putting itself in the position of being able to really compete with the iPad. It certainly has the resources, but it would need to (among other things) aggressively build an application community which is separate from Windows (shockers!). This will certainly happen - after Windows revenue has dropped by about 50%, and then it will be a way-too-late act of desperation.