It would be a stretch to argue that Microsoft's release of Windows 8 was anything other than a disaster. It was. It was terrible. As business events go, I don't think the word "nightmare" would be hyperbole.
There had to be someone inside of Microsoft who knew it was going to be a disaster. The Windows team has too many people for them all to be completely out of touch. Someone had to know that Windows 8 was totally unsuited to the desktop world, which is still a significant part of their business and where most of us do our work.
Even more importantly, they had to know that the operating system representing interesting offerings in the touch-device world. It's actually not too bad with a touch device. I could see it having taken over some market share in the tablet and phone space.
I think, by now, everybody knows what Microsoft "should" have done. They should have released what they are calling "Windows 8" as a touch-only OS and kept working until they had a real OS for real computers that they could call "Windows 8" with pride.
...but that's easy. It's always easy to look back and say "You should have released that under a different brand" or "You should have folded that hand even though you had three of a kind." Everyone makes great decisions in hindsight but I think we can look at the information that Microsoft had and see that they made some bad decisions knowing what they knew.
As I mentioned already, the platform would probably have done alright in the space of touch devices. Clearly someone, somewhere, thought that it would do well on desktops too but I bet you that their confidence was not has high as it was for mobile devices. Even if they were 98% sure that Windows 8 was going to be a blockbuster product in the desktop world, they were probably 98.5 or 99% sure it was going to do well on tablets.
That division is what they failed to recognize. I think that, if Microsoft had done a phased roll out of the new OS technology and targeted one form factor, they would have chosen mobile phones or tablets. If they'd done that, it seems pretty apparent to me that they would have gotten good or mixed reviews - which is a lot better than people marching down Bel-Red Road with torches and pitchforks.
They could have carved out a substantial and defensible position for Windows 8 in the first place and then, if they moved in to the desktop world and failed exactly as they have from that point on, they could be retreating into the mobile world rather than being routed completely. It is possible that they could have leveraged whatever goodwill they had in the mobile market(s) to sustain Windows 8 while they got Windows 8.1 out the door but that's more speculative than my previous claim.
This is another flavor of the same old batch-size and cycle-time problems that have plagued Microsoft since as long as I've been in the business of professional software development. I sincerely hope they learn their lesson before Apple realizes it can't ride the coattails of Steve Jobs's ghost forever because I would very much like to live in a world where Microsoft and Google are vying for #1, not Google and Apple.