Nobody framed it better than Apple themselves at the iPad launch. On the big screen was an iPhone, a MacBook, and in between them, an iPad. Steve called it a new category, and that wasn't just marketing speak. It really is a new kind of gadget, designed to make you do things that you previously did not do. This is why everybody says they have no use for it.. because they truly don't, until they have one in their hands.
With that in mind, Microsoft and the rest of the tablet me-too wave, probably don't appreciate what they are up against. There is no tablet market, there is an iPad market. Microsoft's best shot would be an X-Pad. Everyone else should get behind Google. But really, I think Apple is going to own this category for a good decade.