In a surprising reversal of its position on competition related to the Surface tablet, Microsoft admits in an annual report its tablet competes with PC makers after all, going as far to note that the Surface might even hurt Windows 8 sales. Redmond has been criticized a lot for entering the hardware game to compete with vendors who make various Windows devices.
PC makers are unable to compete with Microsoft on level ground because their already thin margins are stretched even thinner as they must pay license fees to Microsoft to use Windows 8 on tablets, an added cost that makes their gadgets more expensive...