It quite obviously has to compete with the likes of Android and Mac's iOS on tablets. However, I suspect that due to its late start, it'll always be playing catch-up. Now that users have become familiar with new interfaces, it'll be hard for Microsoft to claim back market share. Finally, because Android and iOS have had such a head start, their app markets are fairly mature, and this is where the real value lies.
It'll be interesting to see how Windows 8 fairs on the tablet against Google and Mac.
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