I don't think Ballmer has done his job as badly as many people make out, you can't really ignore the fact that profits at Microsoft increased nearly 200% under his tenure since 2000. As CEO last year Microsoft saw profits of nearly 22 billion dollars, and profits had been just under 8 billion the year before he took over. I think Microsoft's products as a whole have been steadily advancing, and that is a problem when people expect leaps and bounds, but I've really yet to use any of their products and say it is truly inferior in every way in comparison to what competitors are offering. Zune is really the only one that comes to mind, but it is hard to beat Apple at their own game and if you're not buying an iPod at that time, you would have been happy saving a few hundred bucks and getting a simple, reliable MP3 player from any number of device manufacturers. Zune just wasn't a good product to compete with the iPod until later generations, but at that point iTunes had grown so big it was hard to even keep up in terms of music and movie licensing in the Zune Marketplace.
But I do see a lot of Microsoft's failures as correctable, and truly hope his replacement walks in willing and capable of fixing the platforms that are struggling. Surface Pro is certainly a product they would be foolish to kill off, especially considering that Haswell finally delivers a platform that can fit into tablets without sacrificing battery life or performance. Some of these new chips have an SDP rating as low as 6w. Higher end A15-based SoCs like Samsung's Exynos 5250 reach a peak TDP of about 8w. And the upcoming Atom evolution will certainly make it possible to have a "semi-pro" surface tablet that could very easily balance price and performance in a perfectly usable product.
And I think Windows Phone would find greater traction if Microsoft leveraged their position and integrated cross platform features with Windows and the xbox. They could do so many great things but thus far its more gimmicky than anything truly ground breaking.
And I do admit my experience with WHS is very limited, as my own servers are linux based - but I do think Microsoft could take a page from Apple here. With Apple, you can go buy any OSX powered mac (the mini is popular choice) and hop into the App store and pay $20 for an upgrade to OSX Server edition. Microsoft could easily do this, and just offer the best features of WHS as a software stack and perhaps throw in some code to remove the bloat you wouldn't need in transitioning from a desktop version of Windows to a home server version. I'm sure there will be limitations in such a product, but over time Microsoft would be able to address those and grow the feature base just as Apple has done since removing their $500 OSX server and making OSX server an addon for standard OSX.
If Microsoft find's a replacement who is actually interested in improving the products, it could be a very quick turn around for them. But I really hope they don't bring in a cost cutting machine who just wants to slash projects left and right in an effort to save money.