Just like most everyone else in the industry, both Intel and Microsoft got the tablet market wrong. They saw tablets as little PCs rather than big smartphones. If you need an example of just how wrong a design can go, I offer the Avaya Flare, which for $1,500 weighs more than 3 pounds and looks more like a clunky Walmart LCD picture frame than anything else.
Even Apple didn't fully appreciate what the tablet market would become. Supposedly, it developed the iPad first and then shrunk it to create the iPhone. But the genius is that the two are much alike, sharing common design, operating system, and apps. They're intended mostly to retrieve information, with very little ability to input large amounts of complex data. The type of information retrieved, need for portability, and duration of viewing tend to dictate the size.
It appears that both Intel and Microsoft followed their own desires rather than those of their customers. Corporate group-think can be an incredibly hard thing to overcome, even in the face of the success of the iPad and the myriad failures of Windows-based tablets. It took threats from large OEM partners to convince Microsoft's top brass that Windows 7 wouldn't cut it as is on tablets. Intel's failure to grab onto the smartphone and tablet markets is even harder to fathom.
The enabling technology for smartphones is the system on chip, which attempts to combine as many aspects of a computer system as possible onto one piece of silicon. By combining cores, memory controllers, cache memory, graphics, and more, the chip allows for the vast majority of the device's work to be done in the chip's lower-power-consumption confines. The stuff off-chip includes radios, display drivers, audio amplifiers, GPS -- everything you need to interface with the outside world. This is familiar ground for Intel, which understands these systems well and should never have ceded the market to the Qualcomms and others that have made their fortunes in dumb cellphones.
Server Market SplitsvilleJust because the server market's in the doldrums doesn't mean innovation has ceased. Far from it -- server technology is enjoying the biggest renaissance since the dawn of x86 systems. But the primary driver is now service providers, not enterprises.