Dot Com 2.0
Lindows releases LindowsLive free over P2P networks. Idiotic? No, not a bad move. This is classic network market strategy - give away the product to build the user base. Dated, but it holds in the OS market - because switching costs are massive.
The Lindows strategy isn't based around selling it's OS to generate cashflow - it's based around dislodging MS, at least in a niche segment of the market, and then cashing in via bundled licenses and other tricks. The only way to do this is to break the network via a value shift. Lindows is attempting to do so via (essentially) massive price competition.
It's more difficult (and risky) to try and shift the value equation upwards, like Apple's been trying to do - unless you can build competences devoted to radical innovation, like Google's learning competence. Will Lindows be able to develop such a competence? I think that's the only it will be able to realistically compete against MS - who can match it in price competition when Lindows begins to pose a real threat.