This feels more like a reverse takeover to me. MS actually has a legacy problem in the form of the windows ecosystem. Under Ballmer this was a problem that required defensive moves and rhetoric to not lose people to Linux and OS X and it didn't work. Under Nadella, a bait and switch was initiated where the problem (windows legacy) is slowly switched out for Linux. This is not the embrace and extend policy of last century. They don't care about software licenses; they care about SAAS revenue these days.

In the process, they are rapidly regaining developer trust by building productive relations with the same developers they were alienating under Ballmer.

It's smart. They own Github now. Most stuff that happens there is not windows centric. But increasingly the MS developer ecosystem is being untangled from windows in any case. That's necessary to future proof it.

While the windows kernel is nice and the driver ecosystem around it serves MS well, it's actually been a problem for them as well. They've failed in the phone market (repeatedly) because linux was a better fit for OEMs. Also they've had Google and Apple compete with them effectively with the ipad and chrome os in a market where MS was peddling crippled laptops. These are all examples where windows legacy was part of the problem for MS. They weren't able to compete there. Their crippled laptops were too expensive and uncrippling them would kill their high end market. So people bought ipads and chrome os laptops instead.

Increasingly desktop software that is not web based is getting more and more of a niche. Even office at this point runs well in a broswer and MS actively supports native applications on platforms of all their competitors (android, IOS, OSX, etc.). At this point that's not optional from a revenue point of view. A windows only office would be a problem at this stage. They support it and they actually do a decent job too. This too is something that happened very quickly under Nadella. A lot of the Azure revenue is in fact office revenue.

IMHO this move to support GPU virtualization and ultimately running linux desktop apps, gets them access to a lot of niche OSS applications for Linux, the entirety of the machine learning ecosystem, and the community of professionals using that. Not all of them will switch to a windows laptop of course. But some will and they tend to be the type that spends money on their tools.

Additionally, they are doing a clever play with APIs, github, cloud native stuff in Azure, development tooling etc. where they are not blocking using non MS things but merely make the choice to buy into their premium SAAS subscriptions more attractive. All of this stuff is usable without doing that but if you are using VS Code already, have your code on Github, and are doing some AI stuff in the cloud, etc; it's a small step to buy into a well integrated ecosystem provided by MS where you are using a windows laptop with their oss tools, while deploying to Azure, and maybe doing your office stuff using office 365. The value is no longer in selling the OS but up-selling SAAS and making sure the choice to buy into that is logical, easy, and natural no matter what you use.

Github codespaces is a great example of that. I bet it will be really easy to setup and come with some nice SAAS subscription. It's all OSS and you are welcome to run it on AWS or your own cloud. But I bet it will be easier to run in Azure. MS tools, MS cloud, MS as the easiest place to run linux developer tools (!!!), etc. They won't force anyone to switch. They don't care about individual developers but they do care about what their bosses sign up for in terms of SAAS services. That's where the money is.