This reminds me of a device that I owned a long time ago, a Jornada 720. That Handheld PC used Windows CE. And that's the relation with this news. Windows Embedded Compact 7 in not more than an update of Windows CE.
Microsoft has just released initial code for Windows Embedded Compact 7. A follow-on from Windows CE, this operating system is handled in a very different way to your standard Windows installation. Instead of essentially the same block of code being used for every system it's installed on, developers are allowed to chop and change which software modules the OS does and doesn't include and even view and edit the source code to make the software fit its purpose in the best way.