It actually makes sense for Microsoft to do hardware now. Back in, say, 1995, PC technology was moving so quickly that keeping up with the Joneses was horribly

It actually makes sense for Microsoft to do hardware now. Back in, say, 1995, PC technology was moving so quickly that keeping up with the Joneses was horribly unproductive and risky, so Microsoft "outsourced" PC development to the likes of Dell, Gateway, and Compaq. These guys did quite well (in the short term, two are gone and one is struggling now). Today, PCs are progressing so slowly that you can bump your lineup once or twice a year and do just fine. When the real differences between products diminish, it's time to start thinking about other ways to differentiate products, such as industrial design and lifestyle branding. Clearly the likes of Dell have never been any good at this, so Microsoft might as well step in. You could even look at Apple's problems in the 90s being due to their not being able to iterate hardware designs quickly enough and having to compete against faster iterating products with real advantages. As the pace of hardware advancement dropped, Apple's advantages became more salient, and its slow pace of hardware iteration became another advantage (no confusing list of overlapping products and discounted slightly-out-of-date products). All of this presupposes that Microsoft can actually execute. The only true hardware products Microsoft has ever really done have been the XBox and XBox 360. Everything else was pretty much built by someone else with a Microsoft logo stamped on the box.