First, desktop PCs aren't going to disappear anytime soon. They have many wonderful advantages, but they'll gradually become less dominant in the supply chain for hardware and software.
20 years ago when I was at DEC, we used to have these arguments frequently. What's the difference between a PC and a workstation? The temptation was always to elaborate the hardware differences. Bigger CPUs, virtual memory, multi-tasking, and so forth, but these were all wrong. The difference is the software it runs and the user experience. Everything else is a temporary distraction.
In the early 1980s, Digital tried to build their own PCs but failed to understand the importance of 3rd party developers and creating a sustainable software eco-system. Not unlike some cell phone makers.
By the late 1980s, PC software was already dominating the software
industry. There were simply so many more developers writing clever,
gorgeous, affordable applications, that the established mainframe
and minicomputer software business couldn't keep up. If you wanted
the coolest, most cost effective information solutions, that meant getting a desktop PC.
By 1990, Digital realized it couldn't win by building its own PCs (running DOS or Windows), so it tried to bring the best of the PC world to VAX/VMS through X-Windows (aka DECWindows), and put VAX/VMS on a 64-bit RISC chip called Alpha. While these were impressive engineering accomplishments, it's much easier to grow an eco-system up than to grow down.
It didn't take long for the user experience (including the cost of the tools) on the PC to challenge what you could do on a workstation. I remember around 1995 DEC standardizing on Interleaf, a $20,000 word processor that ran on workstations for all their technical publications. I couldn't believe it. Hadn't these people heard of MS Word and PDF? What did they think was going to happen to Interleaf in 5 years? The business model of these systems simply couldn't keep up with the much more affordable Windows/Intel eco-system.
The similarity with today's Microsoft trying to squeeze Windows 8 into a tablet form factor is striking. If history is any guide, this will be extremely difficult. Not because the engineering can't be done, but because the user experience and business model will not be compelling compared to alternatives that were designed for Mobile from the ground up and have a 5-year head start. How will tablet makers feel about paying $40 to license Windows? How will Microsoft get $100 for Word or Excel when Apple charges $20 for Pages or Numbers? Can Microsoft afford to match Apple's business model?
The computer industry has gone through several similar transitions and it's challenging for the titans of one era to be nimble enough to innovate and thrive in the next era. Consider the following sequence:
Desktop PC ->
Internet PC ->
Mobile Internet ->
(Multi-Touch + cellular)
While we describe each era in physical device terms, this is misleading because the real transition is the user experience and the software that runs on these devices. The iPhone and iPad provide mobile Internet and productivity apps, but they do much more: music, pictures, video, movies, GPS navigation, books, games, and a large App library. Nearly as important are the many ways they do less: very little malware, no visible drivers, no extension conflicts, no file system, no hard drive, minimal configuration, compact, lightweight, low power, and no fan.
Squeezing windows into a tablet form factor is unlikely to match the best in class mobile experience in each of these areas, but that doesn't mean it isn't worth trying. There's a huge base of developers and business customers who would love to access their familiar Windows tools from a mobile platform. The difference is whether this can attract the mass consumer market.
So what does it mean to say we're in a Post PC era? The focus of innovation, growth, and profits has shifted along with the attention of the masses. Traditional PC software (and hardware) isn't going away, it's just no longer the most dominant thing driving the industry.
The PC emerged in part as an expression of personal freedom and will remain popular for managing and storing your own data; writing your own programs; and running software you own rather than submitting to the whims of the Cloud. PCs have great displays, file management, and input capabilities. Where the PC has suffered as a consumer product is:
Being too complex for what users need most of the time
The need to deal with malware
Ease of finding/installing/updating software
Lack of mobility
Ease of backup, restore, migration, and replacement
Ease of service when things go wrong
Value when just the basics are enough
How these trade-offs are managed will define the Post PC era.
P.S. Many of these PC limitations are not addressed by Android tablets which are having a hard time gaining traction in the market.