On one hand, it is smart on their part. They are allowing their customers to access source code, and get SDKs, etc that help them build products. It will probably work, to a fairly large extent. However, it could set adoption of Free Software back some - if people perceive that they are getting all of the benefits of Open Source software without any of the responsibilities, they'll jump all over it. Ultimately though, people will realize that there is no free lunch.
Freedom is worth the responsibility.
A number of countries are adopting policies that requires the use of Free Software. Losing the government as a client would probably be a pretty big blow. Also, if ever any legislation were adopted that required a free software license on publicly-funded work, that could hurt companies that want nothing to do with Free Software. They were subtler this time, and didn't claim that Free Software was un-American. But this time they tried to take a common method of attack and claimed that without profits from software sales, there would be no more innovation.