I agree that MS is hungry-bat for license fee, on the other hand dont agree that Free software is the key. What about Apple than? they dont ask for license cost however they dont allow you to play with other rules. The way that MS could win from the pad market is that they make serious partnership with computer producers as like Dell, Asus, Acer etc with low cost license and ARM support. On the other hand we are talking about WIntel cooperation. I dont think in short term we could see ARM based MS systems
I don't see tablets being "productivity tools", but a new class of machines. My company, for example, will be using tablets as super remote controls to be supplied with our AV systems. I think they will mainly be entertainment devices.
I disagree with the premise that Microsoft Office is not a requirement for broad adoption of a Windows tablet OS. Regardless of any amount or lack of suitability, Windows is used by the masses and the masses need transparent interoperability.
People have enough trouble just managing file location and duplication with multiple devices. Add in format differences between a tablet and a full-PC and the problem will on be much worse.
If tablets become inexpensive enough to be single use devices (web browsing only, entertainment only, etc) then, perhaps it would work without office application compatibility, but as anything close to a replacement for a netbook/notebook or as any kind of a productivity tool, it just won't fly without it.
What CPU they are running on is the least of Microsoft's concerns in terms of tablets. Their knee-jerk reaction is to impose the Windows heavy client model on them, which is far from optimum. This was their mistake in the first round of tablets a decade ago. Making it into a big phone isn't quite right either, as is being discovered with the current generation of tablets. CES this year will be the first chance to see Google's take on a real tablet operating system and user model. There is a door still open here for Microsoft, but it may be closing fast.
Perhaps Windows for Tablets should evolve from Windows Phone rather than from Windows 7. It should, of course, run on ARMs as well as Atoms.
One must wonder though if MS isn't too late to the tablet party to make a difference.