Netbooks ARE the surprise attack. No time in history has Linux desktop had such broad adoption, and it's all thanks to the netbooks. In fact netbooks are a market that started with Linux, the first Asus EEEs were Linux only. Linux was chosen because it can
run on low powered hardware and it lacks license fees, both critical to maintaining the low price of netbooks. Microsoft had to come running to Asus, not the other way around.
It's Microsoft that's trying to catch up here, and it wouldn't surprise me if they did give Windows XP away for free to try to dominate netbooks like they do other PCs. Seeing how netbooks are very tight margined, I have no reason to doubt Shuttleworth on this.
Even a free Windows might offer Microsoft some respite, but it's not going to stop Linux on the netbook by any means.
Freescale is going to put out ARM netbooks are coming in April, ~$200, running Ubuntu most likely. This will be huge. And Microsoft could pay Freescale $100 per install for all it matters, it wouldn't do any good WinNT doesn't run on ARM.
Lets just see if Microsoft will have an ARM port of Windows 7, and somehow get all their ISVs to make ARM ports, while justifying license fees. I don't see it happening. Good luck anyway! But anyway Ubuntu already fully runs on ARM - all software inclusive.
Do you really think that Linux created the netbook market? Wasn't it rather that the netbook market just needed a free and cheap OS?