While I'm impressed with WP7, it's not such a big leap forward like the iPhone was when it launched. That's the big problem for Microsoft. The Zune HD was pretty nice when it launched as well, but it wasn't compelling enough to displace the iPod Touch.

If someone is going to innovate past Apple, they can't just make a sligtly better iPhone or iPad, they need to invent the new product category that will make one of those devices irrelevant.