The keyword here is, "flexible" and perhaps "adaptable" - MS clearly is going to respond to markets and change accordingly.
Let's say a low powered notebook, or "netbook" ships with Windows 7 Starter. Runs well and sells for <$400.00 USD. A month later the customers wants to move up to Windows 7 Home Premium - they pay, oh I dunno... $40.00 - $60.00 online and ten minutes later, after running the Anytime Upgrade, http://www.winsupersite.com/win7/ff_wau.asp the customer is up and running. The customer wins and so does Microsoft - ergo, the market wins.
Six months later the same customer wants to move up to Windows 7 Professional, or Ultimate and they do the same - another $40.00 bucks, another ten minutes and the market wins again.
Opposite painless, quick and affordable Anytime Upgrades, "Freemimums" work and the definition for it changes - just as the market itself changes and companies "adapt"
Admit it, you're upset, because you know I'm right and you know it will work.
Now, we'll see if MS thinks this is sound and Starter is in fact free - as it should be.
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