Not just that - the "switch out of" bit suggests that the default for a newly unboxed PC will be S mode. Let's see how that goes down.
And to what lengths will Microsoft go to make sure that the computer OEMs don't change this? People buy Windows PCs to run Windows programs, and a Windows PC that cannot do that is an angry tech support call waiting to happen. Any sensible OEM will want to pre-switch out of their PCs, and MS no doubt knows this-- yet they claim that new PCs sold will be in S mode. What will MS threaten the OEMs with to make sure this happens? Will we see a repeat of the "Do as we say or you won't get any Windows to sell on your new PCs" threat that MS issued during the browser wars to OEMs who wanted to include Netscape on their new PCs?