I think they know it flopped. You can see them make small changes to bring back some win7 features. They brought back the start button (but not the start menu) and 8.1 is supposed to bring back boot to desktop.
I imagine your right. The Windows 8 brand is pretty tarnished now. They'll probably bring back all the classic desktop features and call it windows 9.
What's left now? Start Menu, Aero, and the ability to completely disable metro?