Earlier this month, technology enthusiasts around the world awaited Microsoft's opening keynote address for the 2011 Consumer Electronics Show (CES), with the anticipation that CEO Steve Ballmer would talk up a new generation of Windows-based tablets that would take on Apple's surging iPad. Instead, Ballmer ignored some of Microsoft's key consumer brands, and he didn't use the word "tablet" until his closing remarks.

Disappointing, sure. But a year after Ballmer and company promised a strong response to the iPad and explicitly noted it would do to the tablet market what it previously did with netbooks—come from behind for the win—Microsoft's tablet strategy is still in shambles. At CES, the company talked up plans to migrate its dominant PC OS, Windows, to a new class of "system on a chip" (SOC)-based devices, which will include tablets and even smaller devices. But Microsoft Vice President Steven Sinofsky said this Windows version was still "two to three years" away.

So what's Microsoft's answer to the iPad today?

Based on a set of leaked internal slides, not much. In an internal December 2010 presentation that ZD's Mary Jo Foley got her hands on, Microsoft is relying on a familiar, if tired, message: Windows-based tablets offer "choice," better security, and compatibility with familiar enterprise applications, when compared with the iPad. And although Microsoft recognizes some key iPad strengths—long battery life, simplicity, and so on—it claims that Windows still retains the lead for the tasks that matter to information workers.

Microsoft, I'd like to introduce you to reality.

In reality, Apple sold tens of millions of iPads last year and is on track to sell tens of millions more next year. In reality, people are buying iPads. In reality, they're not buying Windows 7-based tablets. And in reality, they never will.

Furthermore, businesses are buying iPads, too, and piloting them in ever faster numbers. Part of the lack of resistance here, no doubt, is the three-plus years Apple spent making the iPhone more acceptable in enterprise environments. That learning went into the iPad, and businesses are openly interested in this new device out of the gate, and not waiting for future revisions. They're certainly not waiting on Microsoft.

And the problem for Microsoft isn't just one of timing. Windows, for all its utility, is a decades-old product that is bogged down by years of often-obsolete technology and UI conventions that were invented in the 1980s; it's just not optimized for the multi-touch compatible devices of today. So the company can add multi-touch features to Windows, as it has done, but the product isn't optimized for such usage, and neither are the devices that use Windows.

If time could just stand still for Microsoft! The company will arrive eventually at Windows 8, which will reportedly feature an alternative, tiles-based UI that closely resembles the superior, modern, and multi-touch-friendly Windows Phone 7 UI. Wait a few more years, and that system will be available on smaller, more efficient SOC devices. But time isn't standing still. By that point, the iPad will be firmly entrenched. Many other competitors—including those based on Android, the HP webOS devices, the Research in Motion (RIM) PlayBook, and more—will be in the market as well, and every one of those systems is based on a lean, mobile-focused OS, not a sprawling desktop-class OS that was designed during the Reagan presidency of the 1980s. This year, millions of people will choose tablets. Virtually none of them will run Microsoft software.

Combined with the other evidence, this suggests that Microsoft's dithering, this time, is going to lead to defeat in this market and, perhaps, ultimately in the market for mainstream computing. This will have long-term ramifications for the company, including diminishing the chances of ongoing success of the product it's trying to protect the most: Windows.

Microsoft knows all about the consumerization of IT. In fact, it's been talking up this trend for the past year. The problem is, the consumerization of IT could be the start of Microsoft's downfall if it doesn't start moving more quickly. In the past, Microsoft could always rely on its corporate customer to bolster earnings when consumers were staying away from its software. But what happens when businesses turn their backs on Microsoft, too?

It's a future that's difficult to even contemplate. But it's also becoming a very real concern.