The desktop business is not dying, it's just reaching its natural equilibrium in a world where tablets are sufficient for casual use. But no way are smartphones

The desktop business is not dying, it's just reaching its natural equilibrium in a world where tablets are sufficient for casual use. But no way are smartphones and tablets going to replace the machines that are used to do most of the work, so the "workhorse" market is pretty safe. One way to leverage this (and pretty sure MS is doing it) is the opposite of what you suggest: to make their smartphones an effective auxiliary device for PCs, beyond just email and exchange and Office. Something like SmartGlass for productivity. Interestingly, there's already work from MSR along these lines, but it seems some way off. As for Android compatibility, BlueStacks already goes a long way there. If they want to, they could snap them up anytime, but I'm not sure they'll want to capitulate on that front.