Disclaimer: I don't know what I'm talking about. :)

To go into full bombastic and Cassandra mode: the PC market is vaporizing. People are now fully expecting to have a 24/7 connection to YouTube/Google (Maps)/Wikipedia/Facebook/Hulu/What-have-you. They want media-consumption/entertainment devices (Google's Chromebooks: just an internet browsing device). Before, the only way to access those things was through the home-kitchen-garden PC most people had: a bulky big thing sitting in some corner of the living room or their bedroom. Then laptops became more popular because you can move around with those (though they're still somewhat bulky and cable-y). Then came smartphones and tablets and suddenly you have a light, more portable entertainment device you can carry with you anywhere! Then of course comes the question: why still have a computer in the first place if all you're doing is easily replacable by shaking/tapping the screen? (Yes, for gamers and workers alike, PC's are more than internet-devices and require keyboard/mice-input that's better than a touchscreen, but they're a minority.)

The problem for Microsoft is, of course, that they're missing the boat. Ever since that holy(?) union many aeons ago between the IBM PC and Microsoft, they have been in 90%+ control of the market. That golden era is now at an end since, in the coming years, most people will stop buying a PC and just go for a tablet/smartphone option instead. Apple and Android (and a lot of others with their own OS) have already colonized vast swaths of land in that New World, and Microsoft is now in trouble: if the PC market is going to shrink that means their total domination of that market (and all the benefits that brings when developers want to build things) means less and less. While they're sure to be in total control of heavy-duty-use-computers (that is, computers intended for office work and gaming) for quite a while to come, that means nothing if the future (kids who are growing up and will eventually join the workforce) is being made in a non-Microsoft land.
(The main reason why Microsoft is so eager with its academic licenses and so little interested in combatting OS piracy: if people are used to working with X, they'll want to work with X. If the New World becomes the biggest (most profitable) World, whoever's in control of that might one day launch a reverse-colonization of the Old World of said heavy-duty-use-computers...)

None of what I'm saying is really new or shocking (or even correct?). So what does this mean? It means that Microsoft has to focus on a future tablet-dominated market, which means it has to bring out a new OS built/ready for that (Windows 8). But there is no IBM with a PC (tablet) this time Microsoft can hook on to and get a free ride to market domination, so they have to build their own (which they now have) and pray that they can reverse the coming tide that threatens to sweep them as it did IBM so long ago: into being just a huge (but no longer dominating) software company that focuses on work applications. Hopefully the market will stay shattered and no one can establish a quasi-monopoly, since it seems to lead to lack of competition and thus lack of innovation. In the Game of Software, you either innovate or you die. :)

(And now I'm going to click that button and see that in the time it took me to write all that five other people have written the same in a more succinct and funnier way, ah well!)