"It's been a great run for Microsoft on the consumer front. But let's be realistic: Other than the Xbox, what has the company done in the past ten years as a hit in retail? Time to concede to focus on servers, tools, virtualization, etc."
While I'm not really sure how to solve Microsoft's hardware dilemma (price cuts would help), I don't think they should ignore consumers altogether. I won't be surprised if we see a cross-platform Cortana release before the end of the year, for example. By 2016, maybe Microsoft will only have 10% of the global smartphone market. But maybe it will have 30% of 40% of the digital assistant market, and all the spoils that come with it.
For example, if Cortana becomes available on iPhones, it will surely have hooks for a Skype app. But will Cortana also be able to initiate FaceTime chats? If Microsoft finds the right balance between openness and internal synergy, it could be a software and cloud force to be reckoned with, both in and out of the office. In Microsoft's ideal world, cross-platform software/services success could still feed demand for Windows devices; if iPhone users come to love Cortana and OneDrive, for example, some of them might drift to Windows Phone, which should be able to integrate the services more organically. I think Microsoft faces tougher prospects on the device front than the software/services front, but I can see why Nadella is still talking about both as opportunities.
All of that is speculative, of course, but I think it shows Microsoft still has reason to pursue consumers, at least with software/services.