No, it sounds just like he meant it. He's saying that:
a) Linux was the best OS for the job
b) Linux was the OS they were experienced with
c) it wouldn't be wise for S3 to start making them use an OS that would both limit them in terms of application and in the talents of their newly acquired team (empeg)
d) S3 didn't make them use WinCE on the Rio Reciever (you saw that, right?)

When I realized d), I became a bit more impressed with S3. I was suprised when I saw a company not going for the standard, thus crippling their own products.

But don't get me wrong, I think WinCE is an okay OS for some uses. I've been using it (at a user level) for almost 4 years now on 2 different machines (one of the first WinCE PDA's, a Compaq Companion, and my HP Jornada), and I like many aspects of it. It's a great way to keep the functionality of Windows in a very compact form. While it has its bugs (I think it crashes more than 98 does!), it does its job pretty well.

I think S3 realizes that WinCE is not what this company does, and it certainly wouldn't help with products like the Reciever or the empeg car. Way to go S3.

DiGNAN