@W3bbo: First, massive shortcomings? Second, there are changes that need to be made when you increase the screen size. So it's not "just deploying on 7-10" tablets". Just an example, I'd hope that on a 7-10" tablet I'd be given a grid of installed applications instead of just a single column list.
That said, you do have a point. It wouldn't be that difficult to put the WP7 OS, slightly modified, onto a tablet. What I'm reading from the comment, though, is that Microsoft thinks they can do better, and don't want to rush that out. It sounds like Win8 is being designed to work in this space, and the comment is hinting that they think it will bring something to tablets that would differentiate them from the competition.
I'm skeptical, though. Microsoft has to learn to be more nimble if they intend to compete. Waiting another year (roughly speaking) to compete in this area means that they'll really have ot differentiate somehow, and I'm not sure they can. That means an uphill battle against already established brands, like what is happening with WP7. I love my WP7, and I do believe it will eventually hold significant marketshare, but there's no denying that Microsoft is fighting an uphill battle there. Why would they want to get into another fight that difficult?