I will be presenting at the next www.PacITPros.org meeting on Microsoft's Better Together story for Windows Server 2008 R2 and Windows 7. I am going to specifically focus on a new feature in the product(s) called BranchCache. BranchCache is a very interesting approach on Microsoft's part to leverage a client/server OS to perform file caching and pre-positioning functions that traditionally has been approached in the network via appliance solutions.
While BranchCache does not address WAN acceleration and optimization, which many of the network appliance solutions target, it does take care of the file caching portion. For many smaller businesses that is the bulk of traffic in either their VPN or WAN networks. The fact that this is an included feature of the OS just shows how (IMHO) Microsoft is pushing more and more services into software and eliminating the need of special network devices.
I think this just demonstrates the fundamental difference in a company like Cisco who is pushing more services and functions into the network and "cloud" compared to a company like Microsoft who is enabling their operating system to perform and optimize on its own. To be honest, I have no idea who is going to win this one.
I think the challenge will be for Microsoft to play better in an inhomogeneous OS environment, it might mean giving away some of its designs and models and perhaps some code to erode away at positions that clearly favor intelligence in the network. Microsoft is all about software and Cisco is all about network - this I believe is the long term battle that most IT professionals are overlooking today.