Not sure where you're going with this, but given the amount of effort and ambition around the Surface, I would say that Microsoft is absolutely serious.
As for Word, there was a limited number of things we could do and fix in a finite amount of time. Trade-offs need to be made.
> there was a limited number of things we could do
No one is blaming you or your team. I'd blame the lowest person in the company who had the ability to install beta versions of Office on beta versions of Surface.
Effort and ambition, together with $4, will get you a double latte at Starbucks.
To beat Apple, you are going to have to take the next step: competence.
When the board fires Ballmer, that will be the signal that Microsoft is ready to get serious. Until then, it's all just talk.