The key here is "compatible." Microsoft's many previous attempts to gain a presence in the tablet market -- it's been trying for a decade longer than the iPad has existed -- have failed because its Windows OSes weren't designed for the context. Slapping a pen- or touch-based interface onto an OS designed fundamentally for mouse and keyboard input didn't work. Apps, common libraries, and OS services all assumed those input devices, and what they presented users onscreen was simply unsuited for pen or gesture control. A few industries created special tablet apps that were pen-oriented, but in essence that reduced Windows tablets to dedicated app devices, keeping it out of broad-based adoption. By contrast, Apple designed iOS for gesture-based input, and people took to it easily -- and developers had to think in the mind-set to even be able to deliver apps.
This week, Microsoft explicitly admitted its old "finger as mouse" approach to touch was a bad idea. From what Microsoft has shown this week, it's clear that Windows 8's Metro UI is designed at the core for gesture-based input. Unlike Windows XP, Vista, and 7, its UI is not the standard Windows interface with touch technology slapped on. Microsoft may well have finally removed one of the key barriers to successful Windows tablets -- assuming developers can create "big" apps like Office and Photoshop in Metro; if not, it will be hard to say Windows 8 tablets are any better than iPads.
Microsoft also risks breaking the experience on the desktop, where the vast majority of people still compute. (Although I believe we are moving into a post-PC world in which mobile devices will become dominant, that won't happen overnight, and there will still be a place for old-style PCs as specialty workstations.) "Legacy" Win32s apps from Windows 7 and earlier won't get the Windows 8 Metro UI goodness unless they are at least partially revised; even then, they'll be limited.
Users will find that touch, syncing, and interapplication sharing won't always work. (A big change in Windows 8 is the use of contracts, which provide a common template for sharing. Any apps that use the same contract can share information or state automatically. Thus, apps can work together without having been designed explicitly to.) Imagine picking up your Windows 8 tablet and launching an app that doesn't support touch. Whoops! That can't happen on an iPad precisely because it doesn't run Mac OS X apps.
Microsoft's pitiful touch-based version of Windows 7 showed how touchscreen PCs can be unnatural to use -- for starters, the screen is in the wrong place. Yet Windows 8 assumes that all screens will be touchscreens by 2015. Microsoft says the Metro UI is designed for such vertical touching; see where it places the app bar for application functions and the charm bar for systemwide resources, as well as its use of a floating keyboard that, like the forthcoming iOS 5, has a split-display option for thumb typing. The idea is to keep people's hands away from the center from the screen unless they are manipulating an object in that spot.
Microsoft says that approach works for both vertical monitors, such as on PCs, and horizontal ones, such as on tablets. Apple chairman Steve Jobs says vertical touchscreens are senseless, so Mac OS X encourages the use of touchpads. I can't say for sure until I test Windows 8 both ways, but it does seem as if Microsoft has thought through this issue.
Still, Microsoft's support for legacy applications on Intel x86-based systems and for two different types of touchscreens (flat and vertical) could confuse and turn off users. It's fine if the UI differs between tablets and PCs; they are used differently and thus should have variations. Apple has shown that beautifully in iOS and Mac OS X, which share UI approaches but remain distinct where it makes sense. Microsoft has to reach similarly smart decisions. At first blush, it seems to have done so for Windows 8 and for Metro apps but Mixrosoft also showed almost no legacy apps, so it's hard to tell what the real user experience is like when switching among application generations and across devices with different hardware capabilities.