Re: and Wrong Market
Agreed. And I disagree with the article - phones are not where MS needs to start.
The phone market is too hard for MS to compete in - it has no leverage and the "Windows" (sounds like office equipment) brand is a disadvantage when buying a personal phone and there is no loyalty
MS should focus on integration between tablet, PC and cloud - even if that means making nice with Google and Amazon. Make itunes look like the ugly brute it is. Don't try to make Windows Live the only option, make gmail work really well. If MS want to gain traction, they will have to do without some income. For example, they could offer ad-free search on their own tablets (for the time-being at least) via bing or back off music/video purchases to Amazon rather than trying to take a cut.
With the cpus in phones increasing in power, it won't be long before they become a de-facto thin client, with wired or wireless KVM. What happens when the GPU's are strong enough to drive a 2560x1440 screen, or monitor manufacturers put in a cheap graphics unit so android can play on a normal screen or two, with bluetooth keyboard/mouse for input? Suddenly, your "too small to use" device gains legs, and MS has accustomed users to a touchscreen-look UI on their work pc. Add to that, the fact that unix can run individual apps off different servers. So email can run off a cheap ARM unit and your big spreadsheet can be running on a beefy x86, being shared without any virtualisation/citrix (or any other) licenses required.
MS have to get people using the windows APIs on tablets or its game over.
I'd go further - create RT blades for mass VDI deployment (also usable as thin clients), because if the linux/android crowd manage to get their ARM bits popular its going to hurt. From VDI, you can back into the tablet and phone markets. You can also re-use a single RT blade as a home-microserver if you have HDMI and some sata ports.
The aim here is to loss-lead your new environment by offering cheap but lower-spec windows and Office.
That's what I'd do if I were them. I don't think they will though. I think they have more hubris than common sense. They think (or at least project that they think) that their product is good enough to to win on its own merits. I suspect not.