“A lot of those users are frustrated. They can’t type. They can’t create documents. They don’t have Office there. So we are providing them something with the benefits they have seen that have made that a big category, without giving up what they expect in a PC.”
There are plenty of bluetooth keyboards and people seems to be getting work done just fine without Office. I believe that the biggest mistake that Microsoft has made in recent years is not releasing Office for iPad in 2010. Fast forward to 2013 and folks are realizing that "work" doesn't always require Microsoft Office.
You’d think that if a signficant portion of the tablet market really does want the more chimeric device Gates describes, Surface would be doing quite a bit better at market than it is currently. But it’s not. Not yet, anyway.
This is a repeat of the Zune vs iPod scenario. Apple innovates and Microsoft copies. The Zune was a really nice MP3 player, but it wasn't drastically better than an iPod at anything. While Microsoft was building the Zune, Apple was building the iPhone and iPod touch.