Tablets are coming and with it we will witness the slow and agonizing death of the Windows / Office hegemony.
There can be no doubt that a significant portion of people will purchase a tablet in the next decade. At first it will be as an adjunct to their "traditional" PC and not as a replacement.
However, as their traditional PC's get older and the tablets get better more than a few non tech people will actively consider making a decision to buy just one or the other. Increasingly they will choose to forgo on the traditional PC in favour of some form of small form factor touchscreen alternative, probably with a bluetooth, keyboard + mouse equipped dock for using it on a desk.
Microsoft on the other hand have lost any clue they may have once had. The only thing they have is their bullying relationship with their OEM "Partners", their various user lock in technologies and the existing Windows + Office monopoly.
Before we go any further we must remember Microsoft's Rule #1.
Rule#1 is to protect the Windows + Office monopoly. Everything else is secondary.
To do that Microsoft cannot afford to introduce products that will tempt their customers away from their overpriced and under performing flagship bloatware, therefore any "Tablet OS" will be either a poor second cousin to the desktop products or else they will continue to be what they are today, which is basically the same laptop/desktop OS crowbarred onto an overweight, over heating "touchscreen laptop" sporting the same old fashioned point and click UI that they have been pushing for decades.
This has failed for them for the last decade, there is no reason to believe that it will be any less of a fail in the future.
So, assuming that Ballmer has less success at bullying his OEM's into killing the tablet market like he did for netbooks that will leave most people choosing between various tablets sporting iOS or some form of Linux.
This is a huge problem for Microsoft. The main thing that keeps them in their position of dominance is the Windows monoculture. Most non techy people simply believe that if you want to type a letter you need Office and if you want to use the internet you click on the "Blue E". Various lockin "features" (docx files, .NET, Silverlight) help to reinforce this behaviour and serve to make developers lazy. Why develop open products that can be used cross platform when 95% of users will run IE6 with Active X on Windows" was the status quo for half a decade until Firefox came along. Eventually, the growing numbers of people who were NOT using IE6 on XP reached a tipping point where developers were forced to wake up and stop actively reinforcing Redmonds iron grip on the Industry. The internet is a better place for it now.
So it will be for tablets. Apple has already shown the way. Microsoft will totally fail to keep up as it continues to try and protect its existing monopoly while the Linux upstarts will take up the remainder of the market.
Eventually we will reach another tipping point as developers are forced by the market to wean themselves away from their Visual Studio plus .Net addiction and Joe Public comes to understand that the Microsoft way is not, in fact, the only way and they can write letters to their grandkids perfectly well without the need for a bloated, over featured and expensive PC that requires constant attention, vigilance and third party security products just to keep it functioning.
I fully expect that within 5 years Microsoft will be relegated to corporate desks, and even there their dominance will be waning.