The meeting was filled with a lot of confident language and bluster, but the subtext is that Microsoft is staying the course, after spending a decade or more ripping the keyboard off a Windows laptop and calling it a Tablet PC strategy.
Microsoft actually has some serious strengths to build on here, too. And Ballmer is aware of them. Building your product on Windows gives you a huge ecosystem of device drivers and applications. He's right that a Windows tablet will print to a printer while an iPad won't. But for all of Windows 7's strengths as a desktop PC OS, its UI is wholly unsuitable for a tablet PC. Fiddly little icons and menus and a stylus just won't cut it now that people have seen what iOS and Android can do.
If Microsoft is really committed to seeing this Wintel Tablet strategy to the bitter end is should be focusing its energies on two things: working with its hardware partners to create a small, thin, light, power-sipping and CHEAP tablet, then building some kind of UI development tool for Visual Studio that makes it really easy to adapt a Windows app to a touch screen. And this is, of course, on top of the obvious project of making a version of Windows 7 with an actual touch-centric UI. You would think this would be obvious.
But what's coming out of Steve Ballmer's mouth is, "We have got to make things happen . . . We're in the process of doing that as we speak. We're working with our hardware partners. We're tuning Windows 7."