Here's his article.

Basically he says that consumers will never think of a computer as an entertainment device. He has a valid point, but let me offer some ideas that may make MCE make more sense.

First I'd ask him if he considers the XBox to be an entertainment device.  I do.  It's also a PC.  It can run Linux with a few modifications, so it has all the hardware to be a true PC.  The XBox certainly isn't marketed as a PC, it's a game console.  Microsoft also looses money on it.  The reason Microsoft can market the XBox as a game console and loose money is because they make a lot of money on the content they provide for the system (Halo2, etc.).

The reason I talk about the XBox is because a logical question would be, why don't they just make a device that is more similar to the XBox, but runs Media Center?  Consumers certainly would buy more set top media center boxes than they will MCE PC's.  The problem here is that if Microsoft did this, they would have to do so by taking a loss.  The MCE set top box would have to market around $200-$500 because it will be compared to other pvr's like ReplayTV and Tivo.  If Microsoft decided to take that loss, they would have to have some plan for gaining the money back somewhere else.  In the XBox world that is why they develop games.  In the media world Microsoft doesn't have any content... yet.

I believe that the MCE 2005 is more of a trial than anything else.  Get a product out there that can do all the media stuff.  In order to justify paying around $1000 give the customer a PC that can do all the non-media stuff as well.  This way, once Microsoft buys or partners with a content provider (comcast?) they can put together a set top box that already has a few years of testing in the wild.  They will learn what users want now so they can incorporate it into the device that will be more attractive to the masses.

Here's my prediction... expect Microsoft to partner or buy a media content provider and then expect to see media center set top boxes available from that provider for a rental fee or some other scheme that will allow MS to not take a loss on the hardware.

If they don't go down that route, then I believe it will end up being a flop.  Especially with devices like this coming soon.