One very likely scenario is that the hardware is purchased without buying the software license for Windows. Then the computer buyer borrows a copy of Windows from a friend, dumps Linux, and installs Windows on the box. Linux is still too hard to use for a computer newbie.
I wonder how much of the demand is being driven by the tech-savy folks who have been buzzing about $200 linux boxes since they came out, rather than the intended target market. I know of one guy I used to work with who went out and bought a whole bunch of 'em to build a cheap cluster with. I've considered going out an buying one, too. They may be cheap little machines, but they're new enough they can't help out-performing the machine I'm currently using as web, mail, and DNS server for 3 domains :(
I am actually considering getting one too, there is just something very cool about a $200 Linux box. It would be interesting to see how much use you could squeeze out of $200. Apparently apt-get is fully functional and the conversion to a pure Debian setup is relatively painless.
They also have several Celeron and Duron PCs for under $400.
Just gotta add, I think it is really something that they are selling three(!) different flavors of Linux now. Walmart must be enjoying the fruits of their boldness in taking on Redmond on such a large scale. For years I heard that vendors wouldn't sell alternative OSs because they were affraid of MS's fury. Walmart made the move and look at what happenned. Now they are selling Linux along side XP and MS is just happy to be an option.
I have hear that pre-installed Linux is relatively common in Asia, I guess it will be here in the near future too.
Apparently these PCs are actually arriving in some of the stores now because the online sales have been better than expected.
Yet another post on the topic. :) Sorry, sometime I just can't help myself when it comes to Linux on the desktop -- I get like a 10 year old boy who is about to bust open a Pinata. He isn't really interested in the candy inside, but just loves the sensation crushing colorful cardboard....