The only difference between my hp tx2500z, and the ipad is that the hp is thicker, less heat efficient, and has a shorter single batter life in every functional way, it's 1000 times better. It also cost about the same.
You already have a great setup that works for you and its shortcomings are more tolerable to you than the iPad and similar devices' shortcomings. Perfect. iPad and similar devices suck... for you. Nothing wrong with that.
We really don't need to go through this pointless exercise of identifying why it's ridiculous to have anything besides a full fledged laptop style tablet running a full OS. That horse is as dead as a horse on the moon.
Now whether Ballmer's prediction is correct? It'll be wait and see won't it? Conventional strategy is always about repeating what worked last time which is the MS and Google approach. Steve Jobs seems to think that what didn't work last time around will work this time around. That sounds equally dubious, but the value proposition of a controlled platform may have more appeal than it used to. So much of what the average non-geek wants is Web based anyway and apps are more readily available for all significant platforms than was the case twenty years ago when the consumer software industry was merely getting started.
The world has changed. We just don't know how much. I personally think Ballmer has as much of a chance of being right as Steve Jobs does, but I don't give his view more weight simply because it was the last winning strategy used.
Don't hand out crowns to Android just yet because it had a few very good cycles. They're still a feel good story and haven't yet been subjected to the treatment reserved for front runners. The lead Apple has in Apps? It's huge, but I wouldn't overvalue that either. For the same reason why a closed system might not be such a bad idea this time around makes the lead in application count less relevant than it did 20 years ago.
Chill out, buy what works for you, and enjoy the race. Apple won't destroy the software industry nor own the world. Neither will Microsoft. Google just might own far more of the world than anyone is comfortable with, which would then really pose a problem to their core value because they wouldn't be Google if people everywhere started treating them like they're indeed very evil and go through pains to withhold personal data from them. Their future is not a foregone conclusion either. They make a lot of money, but they spend a lot of money too.
Yahoo has been that way before and Yahoo started spending money left and right on all sorts of things it wasn't known for and then they were hit really hard by AdSense and a drop in display advertising.