It needs to create a lightweight, fast, undemanding OS which will shed all of Vista's fat, and for the first time in history really be twice as fast as the last OS. It's not only because of the netbooks, which honestly cannot run Vista (not foreseeing where the laptop market will be heading was a huge blunder by Microsoft) - it's simply because people are sick of big, fat, bloated, slow things and they want something different.
Wrong. Vista was partly a mistake (especially the part where they made sure weaker machines can't run it, and then the market was overwhelmed with netbooks), and partly badly polished Windows XP. Sidebar? Give me a break. No one used that thing, and Windows 7 won't have it any more. Good riddance.
One anecdote that I remember well from Vista launch was the story about UAC. This security feature was annoying to nearly anyone, and pretty much utterly useless. However, one Microsoft developer (unfortunately I've forgotten the name) urged everyone to "give it time," because it was a great feature that just needed getting used to. Now, a significant amount of time has passed since the Vista launch; has anyone fallen in love with UAC? As far as I know, everyone just turns the thing off.
The moral of the story is that there's obviously a lot of developers and project managers over at Microsoft who operate in an old-fashioned frame of mind which led them to produce the fat mistake that is Vista. Microsoft needs to put an end to this and embrace a new philosophy; they need to put speed and simplicity at the forefront and create something opposite from Vista. Time will tell if they're capable of that.