So what do you suggest they do? Stay with a stagnating UI that's not suitable for anything other than a desktop in fear of looking "desperate"? The UI they pulled off is far from desperate, in my personal opinion it beats everything available right now in the mobile world as far as usability and looks go. For example, I haven't seen any one call the new windows phone UI anything short of amazing and it's the same concepts that will be applied to the Win8 UI from what I've seen so far. Their approach also seems much more likely to remain unified across multiple touch device form/scale factors when compared to something like Android.

As far as being last to arrive at the scene, need I remind that this is Microsoft? They're always last, and sometimes that actually works out for them (XBox, .NET), and sometimes it doesn't (Bing).