This history misses netbooks. 2007 was the year of Linux on a desktop: when Microsoft actually had to start giving Windows to netbook manufacturers at $5 down to $0 because they were selling computers with a fully-functioning Linux desktop on them.
Because they were pretty much a non story? Less than 1/2 the impact of something like the iPad, and lots of people switched them that could to Windows anyway. On their best years (around 2008-2011) they sold like 16-20 million units per year (iPad has sold ~350 million units thus far).
Because Intel freaked and pushed everyone over to ATOMs where as the early EEEPCs etc had used discount celerons.
Basically Intel feared that the netbooks plus citrix would strangle the lucrative ultraportable market segment.
At the same time MS gave Windows XP another stay of execution just to have a Windows option to offer OEMs (Vista was just too darn bulky).
Thing is that XP, or more correctly the version of the Windows Update version it used, had a flaw where it would grow slower and slower over time as it tried to enumerate all the patches on each boot.