Embedded Windows? Perhaps not.
A bit late in the game, isn't it? And, really, has Microsoft shown a track record for stability and security?
I'm "fiddling" with one of my embedded devices right now, an ARM based PVR. It runs a version of Debian. My older PVR (closed source, but more or less the same hardware) would appear to run a basic custom OS (might be a highly stripped version of Linux). The Orange Livebox has "busybox" as one of its OSS releases, so I think it's a fair bet that is Linux-based. And my ethernet router with build in web server. Look behind the scenes, guess what OS that is running...
Point is, a large number of embedded systems that totally pass most IT people by (clocking in/out machines, alarm systems, monitors, PVRs, etc etc etc) need to run a complete enough system on very small and not very powerful hardware. My PVR, for instance, is running an ARM9 core clocking around 200MHz, with a DSP to do all the video grunt-work. Flash is 16Mb and RAM is around 32Mb. It does the job perfectly well running its version of Debian. This isn't to say "ooh, isn't Linux good" but rather, there's a lot of embedded hardware that runs within a fairly mediocre specification.
And the final point, is the embedded Windows open source? If not, it is liable to remain a niche player. I have a version called "etch" on a USB key which contains loads of stuff not included in the PVR's version. But for recording video, most of that stuff is not required. The manufacturers can modify the OS feature set as they wish, and given it is a "known" bit of hardware it would be possible to implement completely new functionality (it has SD card reader and ethernet, it could be retooled to serve as a basic web server, for instance). Some people have done pretty amazing things with standard network routers. Would this be possible with a closed OS?
So, hi Microsft... bye Microsoft...