Could MS do HomeStation if it was split up?

PC Format, a UK home computing magazine, has a world scoop on the Microsoft HomeStation. And Flangy, an MS employee, appears to confirm. What is HomeStation? Microsoft’s idea of a home entertainment hub, a combination XBox/PC, with heavy duty graphics and sound. You’ll hook it up to your TV, cable modem or DSL connection, digital camera, PDA, and telephone. It will include personal video recorder functionality. It will be able to play XBox and PC games and run on WindowsXP. And it will make heavy use of Microsoft’s .NET servers and services.

Curiously, David Banks in Breaking Windows is quite clear that one of Bill Gates’ most fundamental principles is the separation of hardware and software and now he’s going to break that a second time. Has the world changed that much?

What I’d like to know is how some obscure British pub had this story before the major tech sources?