The real beauty of the iPad for most people is its instant on, simplistic approach to computing. Being able to do most of the things you want to do without the fuss of booting, blue screens, shut-downs, restarts, and all the other isms that goes with a fully functioning computer, including OSX. If Balmer misses the real reason why people are gravitating to this new sector, then he will miss the boat again. Sure there is a "Techie" market out there who wants a tablet to run Crisis, but I think the majority of buyers are novice to medium users who are frustrated with the ins and outs of a full OS.
And since when did they start making devices? Isn't M$ a software company? I bet if they didn't make the Zune, but made the marketplace and software, then they would have been better off... How about just perfect the software and let the other guys figure out the hardware, isn't that the winning formula for M$?