The question is: can they innovate their way to a new business model? Competing with the OEMs on an ever-wider front is not going to end well; and they're aggressively going after the only part of the OEM's business that makes the OEM's any profit. So what's MS' end game here?
Their endgame is to create a full on Surface line from tablets to phones and beyond. They are premium devices with premium prices, so OEMs have plenty of room available. Eventually Microsoft will have their own Surface line for everything.