Why doesn't Microsoft understand tablets?

While the iPad is selling like multi-touch hotcakes, Microsoft is significantly lagging behind with its tablet offerings with no announced (or rumored) plans for a proper tablet solution.

Internally, it seems like Microsoft just cannot understand the iPad's success. It keeps looking at it from the angle of features/"freedom" that's offered to consumers, while entirely neglecting the UX/UI element to the device.

Internal slides leaked by Mary Jo Foley (She has kept close tabs on Microsoft strategy, products and technologies for the past 10 years http://www.zdnet.com/blog/microsoft) even illustrate that Microsoft are trying to justify their failed tablet offerings by comforting themselves with presentations, which point out the things that the iPad cannot do in the enterprise.

It looks like a case of both corporate politics/division as well as Microsoft not knowing what it truly is. They're confusing enterprise with consumer while their internal politics and structure prevents the truly innovative groups within the company from bringing their ideas to market.