I don't think Microsoft can reasonably compete with Apple in the hardware game. Apple's too good, and they have too much practice. I'm still shocked at their Surface tablet strategy, as I think a lot of people are. They don't have a particularly good track record recently, given the manufacturing problems with the Xbox.

I'm guessing that Microsoft's strategy still lies in software (a healthy combination of Windows, Office, and Business [Windows Server, SQL Server, SharePoint, etc]), entertainment (Xbox, Skype), and "cloud" offerings (Azure, Live, etc).

I think that their release strategy, where they release a "major" update every 2+ years, isn't inheriently wrong. It's still viable, and meshes well with a lot of the corporate money they're chasing. But I do think with the low price point of Windows 8, they realize that there is less and less money to be made in the consumer OS space, and more potential money to be made in servers and services.