The idea that Microsoft is up against major moves in the miniaturized hardware market is not an exaggeration from Randy. Although, I know that he has addressed it from an end-user perspective. I have looked at this issue of user interface from a more business-based perspective, and have come to similar early conclusions. That is not to say I like these conclusions at all, but take a look at what Microsoft is up against in this new, super-fast developing market:
http://www.ibtimes.com/articles/353518/20120618/samsung-galaxy-s3-release-date-usa-specs.htm
Note above: Apple is still trying to file injunctions at the last minute to try to have this phone pulled off the market.
Now, Facebook will roll out its line of phones, which will obviously first appeal to the 16-25 year old demographic next year. This will also be based on the Android SDK. The Motorola Razr MAXX for Verizon outsold the iPhone here in the US. But if we look at what is going on with the Facebook phone, think of your profile as a wireless identifier as you are in a lounge with a dozen people who all have the same phone. Suddenly, you can find out who is in the room with you, and if they're your friends, you can choose to pair the device and share photographs that you take together. You can automatically tag your friends based on the facial recognition technology and "check-in" to locations automatically. Suddenly, it becomes useful for all sorts of things, like business, science, and even exploration. The type of device I am describing has the capability of adding a new layer of protocol to your existing your 3G/4G/WiFi connection, creating what will create a new layered local area network (LAN) using Facebook in bars, restaurants, board rooms, and offices all around the world. Two reviews above and look at the technology they have to beat. I should note that Apple is still trying to get an injunction to prevent the release of this phone, prompting pre-orders to hit record highs. And this is not the Facebook phone I just envisioned to you, based on similar technology. What will emerge from all of this confluence and induction will be the world's largest number of local area networks that form, somehow, using these new APIs and protocols over the cellphone networks, into a sort of new wide area network over the Internet. The inter-connectivity of phones is what is going to change everything, and this has changed hardware manufacturing and selling itself into a service platform powered by advertisers. This is an industry worth hundreds of billions of dollars. Microsoft's current cash reserves, last time I checked, were around $60B.
I theorize that the best way to continue Microsoft Windows would be to create a subscription service for annual updates (similar to what Adobe has done with their CS6 products but much cheaper), and to actually work with Google, Facebook, and Apple to create cross-compatibility with each type of device or an open source consortium that uses virtualization for layering and a unified system for ultra-slim portables, cellphones, and pads. In exchange, the Windows source could be opened up to third-party development from Google and Apple. However, this is a dream scenario. The current situation is that everyone wants a piece of the new pie, and currently, Microsoft only has the crumbs with their phones. This is where we are seeing a big problem. Meanwhile, actual desktop computers used as workstations aren't going away. The demand for them continues.