The gigahertz processor and gigabyte of RAM that are in high-end smartphones these days (and the hardware accelerated graphics chips like Tegra appearing to go with them) have let Apple and Google move their smartphone operating systems onto the larger screens of tablets and given them the power to compete with more than just the most basic PC tasks.
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But they also let Microsoft move some proportion of the power of Windows down onto tablets that can be thinner and lighter and have far longer battery life than Intel-based notebook PCs.
If the tablet proves to be closer to the sweet spot for 'carry it around with you' computing than netbooks, touch is the interface to master and Google and Apple have a head start there.
Windows Phone 7 does touch very well, but Microsoft has to make that transition to what's been a far more complex and less finger-friendly interface. And it has to bring enough apps along for the ride.
We know that Windows 8 on ARM will not run standard Windows apps that you can install today, even though it does run what looks like the full Windows interface as well as the Metro-look tiled Start screen.
Windows apps on ARM
But Windows on ARM will also run Office, for a start. It will be a version of Office compiled for Windows on ARM rather than Windows on Intel, so it's not exactly the same code, but it shows what's possible. Think of it as proof that developers will be able to create full-power Windows applications for Windows 8 on ARM. That means programs that are far more sophisticated than the vast majority of apps on iPad or Honeycomb.
REAL WINDOWS: HTML and Windows apps, side by side on ARM - that's more than iPad or Honeycomb can do
The downside of that could be trying to control a standard Windows program interface via a touch screen when it was designed for a mouse. Microsoft can redesign the Windows tools to work better with fingers - like the checkbox selection of files in Explorer we've seen in demos - but what about third-party apps?
This is where 'fuzzy hit targeting' comes in; Windows 8 will adjust the touchable area for different menu items, icons and buttons dynamically based on what it predicts you're most likely to do next.
This technique works extremely well in the Windows Phone 7 touch keyboard and if Microsoft can make it work it for a wide range of program interfaces, not only will Windows 8 ARM tablets be able to run (recompiled versions of) full Windows programs but you'll actually be able to use them on a touch screen.
From what we've seen, Windows on ARM will have full multitasking: apps switch immediately in the demos, including live video, and even in the new full-screen interface you can have two applications side by side on screen.
iPad and Honeycomb have multitasking, although apps can get closed in the background if memory is required, but you can't see more than one app at once (apart from widgets on the Android home screens).
That could change by the time Windows 8 ships (we're still expecting it to be finished next summer and on sale next autumn) but neither iPad nor Android is likely to catch up to the range of features in Windows - like being able to install printer drivers.
Getting the technology of Windows 8 on ARM right is only part of the battle. What does Microsoft need to get an advantage on tablets? A shipping date wouldn't hurt.
Like other Microsoft teams, the Windows division is famous (or notorious) for not wanting to ship a new OS until it's ready and the tablet version of Windows 8 is only part of the story.
The unified Metro-style interface for phone, Windows and Xbox, the potential of Kinect and voice recognition for a more natural way of controlling desktop PCs and Media Center-driven TVs and other form factors with screens hanging on the wall, doubling as tables and otherwise fading into the background of your life… They all mean Windows 8 is a complex undertaking that covers a lot more than tablets. (Microsoft's Julie Larson-Green has already talked about "classroom-sized displays" for Windows 8 and we're hoping to see support for the MSR 'wedge' screens that use a refracting optical lens and Kinect to show different images to different people watching the same screen.)
BIG TOUCH: Windows 8 will go well beyond tablets and onto wall-size displays - MSR is working on techniques for large screens like this one in the Envisioning Labs world of 2019 video
But the fact that Microsoft can't seem to catch a break (it still struggles to be seen as cool and relevant despite the successes of Kinect and Windows 7) means it can't wait too long to tell us what's coming and when.
After all, according to Dan'l Lewin, the corporate VP for strategic and emerging business development, the planning for Windows 8 ARM tablets predates the iPad. "Think about when the planning started for what you saw just the other day; all the planning, the intent, the interface design work was done before the iPad hit the market. We know where we're going - we just have to get there faster."
We have to agree, but we also think Microsoft has to reinvigorate its marketing - and give the PC makers a push.
With very few exceptions, PC ads are far from exciting and Microsoft can't keep on trying to do the marketing for the whole PC ecosystem when it has so little control over the experience of the PC you end up buying.
With Windows 8 tablets Microsoft might take more control over what you get on a new machine the way it has with Windows Phone 7. And if Windows 8 goes as far beyond the tablet features that we've already seen - as we expect it to - Microsoft is going to need a good way to get that message out without confusion.