“What Microsoft revealed this week is that they do not believe there is a post-PC era. They’re banking that the PC era will never end.”
Daring Fireball: Ice Water Enthusiast
That’s the crux of it alright, and it seems like it’s a Ballmer-inspired move. It certainly fits with the idea of using any new technology to build a levee around the existing Windows and Office user bases: by shipping less-capable a tablet-only OS or a similarly reduced tablet-only Office, Microsoft would run the risk of people taking to those more than their flagship (and highly-priced) products. We know that Ballmer won’t do anything to jeopardize those sales, so any new functionality must be bundled with the existing products rather than available as a replacement.
