It's a chicken-and-egg situation, agreed, It just seems really strange to me that they spent so much effort pushing and developing the software side, without putting any effort into the hardware, when the two clearly have to go hand-in-hand.

Microsoft had the software stack ready - imagine if they had released (via partners) high-dpi laptops and screens shortly afterwards? That actually might have made a Windows machine a compelling and desirable product, instead of just an expensive way to run a browser.