However, I wonder if what MS is going to do is make new PC hardware appliances and sell that stuff, as well as market some home and corporate training.

MS could have success as an up-market sales and training channel but if they start to blur the line between their offerings and those of Wal*Mart (and other retailers), then they might loose their differentiator and what remains of their credibility. This just might be a make or break play by MS to compete for mindshare with Apple for retail dollars and if it fails they will be relegated to a software and wholesaler for decades to come.