The real problem is, if it's a real version of Windows, what stops developers from releasing their games as "Xbox in PC mode" mode games and avoiding paying licensing fees? And if it's so locked down that's not possible, the utility of a Windows desktop plummets dramatically. MS would is much happier selling Windows licenses at a big profit. What motivation is there to start giving Windows away with their own subsidized hardware? There just isn't a profit motive behind such a move. You'd end up in nightmare scenarios where big institutions start buying up all your consoles to be used as PCs instead of spending way more on Dells or Macs. MS would be taking a huge loss on sales that will never generate revenue from game sales. Never gonna happen.