Re: But what was the board doing (listening to shareholders and focus groups methinks)
The problem is that groupthink can never be successful. When a company tries to please ALL of it's constituents it can never have a singular, coherent vision or direction.
Someone MUST BE GOD or there can be no angels (or devils), not everyone get's to run (or ruin) the company, there cannot be more than one vision or you get crosseyed. That's partly what happened to MicroSoft. The other part was (STUPIDLY) no one saw the impending sales doldrums that sealed their fate.
Listening to people (shareholders, focus groups, marketing studies, insultants) pratter on about Apple and their tablets; one might think touch was the only direction that a computer OS software manufacturer should ever take. MS had touch before apple did but it never took off (shoulda been a warning).
Why you ask? Because there are VERY few compelling cases to use touch and the majority of business software is not one of them. CAD, 3D Design, Graphic Arts, are the few applications outside of simple browsing.
All said and done, the PC is not a tablet and vice versa. You cannot be all things to all people (or applications) or you will not even do "some" things right.
IMHO the ideal way to integrate touch with Windows would have been to have the tablet or cell phone become a customizable USB input & storage device, a "super mouse". When the tablet is plugged in and in the right mode, then the PC has touch input, unplug it and it reverts to keyboard and mouse and the PC OS runs like Win7 including a start button. Woulda been simple to have the input device define the way the OS interacted and alot of the gripes could have been mooted immediately.
Microsoft could have made an x86 version of a tablet that did not have to be as expensive or complex as Surface and could have used the same OS for it's phones without screwing up or radically changing it's PC OS. The savings could have been used to make Windows 8 a better product with more compelling features.
Oh well, advice on this subject is endless. Too bad no one ever listens to the people/customers.