On the Surface
I think the Surface solves a problem that Microsoft thinks exists, but doesn’t: the desire to run traditional Windows applications on a device with a tablet form factor.
Microsoft looks at the iPad and sees it as limiting: sure, it’s cool and people seem to like it, but there’s all these “traditional” PC tasks that you can’t do with it, or can’t do as well. So their response is to mimic the form factor (because that’s what’s “cool” about it) but load it with a “real” operating system so you can continue doing all the same stuff you’d be doing on a regular PC.
What they don’t get is that the iPad is a huge success because of its limitations, not despite them. No ability to run desktop apps means the iPad can have its own UI completely designed for touch input from the ground up. No ability to sideload apps or browse the filesystem means you can’t “mess it up” by installing something malicious or deleting critical files. No removable battery means the built-in battery can be very precisely designed to give you the longest possible battery life. Etc., etc.
Surface is really just a rehashing of the same failed tablet initiatives that Microsoft has been trying to push for a decade, only this time with a “touch-friendly” UI (Metro) added onto the side of it to help counteract the desktop UI being unsuitable for the form factor. But the selling point of the Surface really is (supposed to be) the desktop UI: why else would you buy it? Metro is effectively unproven and no one is asking for it (look at Windows Phone 7 sales), and it has far fewer apps than iOS or Android. And note that instead of creating a Metro version of Office, Microsoft ported Windows to ARM just so that the Surface RT and other ARM-based tablets could run desktop Office.
What I think they’ll find is that this supposed dream that people have of running desktop apps on a tablet doesn’t really exist, or not nearly to the extent that they think it does. I won’t argue that certainly some people want that, and more power to them – but clearly if that’s what the mass market was looking for, Microsoft’s earlier initiatives would have been successful (and the iPad wouldn’t have sold 100 million units in only 3 years). The mass market has already moved on; Microsoft just hasn’t caught up to it.