Well I think Microsodt is thinking: Oops I lost a penny, oh well.
Or is microsoft thinking F%%$#^%$#$^$&&$$&$#$&^$# (multiple words)?

Well they likely won't have to pay for awhile since they can appeal this again to a higher court... So they can likely put off paying until at least next year.

ouch!

I think Nintendo stopping Freeloader isn't such an issue because it was an unlicensed product. Everyone else needs a license from Nintendo to put software on their machine, why would they be any different? And besides that, even if this doesn't apply to every game, there are a number of games that can only be sold in a given reason for leagal purposes. Stopping the people who made Freeloader would have been in both Nintendo's interests and the interests of their 3rd party developers. Not that it's a big issue...

Also, between this and the warranty thing, MS has lost almost 2 billion dollars just this year.

 I hope you aren't referring to me =P  I don't think I really bashed them, I just said that the combined effect of these unexpected losses will likely change some decisions they make in the short term future.  

Honestly, people have a warped view of MS.  For instance the guy who was talking about Bill Gates, but Gates no longer runs the company day to day, last I heard he has only minor part time involvement in the operations.  But more than that some folks think they are made of money which is just not true. And while they may in fact bring in a little more than a billion a month in net profits I don't know any company that can lose nearly 2 months worth of net profits and shrug like nothing is wrong.  It won't kill them, and I didn't and won't suggest it will.  But it will change how they think going forward, and maybe thats a good thing and maybe its not.

What does licensed or unlicensed product have to do with anything?  What if Sony during the Playstation 1 or 2 days did an update to their firmware that rendered all unlicensed memory cards useless, would you be supporting Sony in that case?  What Freeloader did wasn't illegal.  What Nintendo did was in it's own best interest and very anti-consumer and isn't that a part of what this is all about, a company that controls a platform using it to their advantage to force people developing products for their platform out of business and removing choice from consumers?

 No you did not point just that out. Did you already forget the last paragraph in your post?

"Anyways I'm sure some people will be happy when they're able to get Microsoft to strip things away and make it harder for novice computer users or ones without an internet connection to enjoy media files on their PC. "

 THAT is the part he is correcting.

Nintendo's platform are their product, and they have right to decide how that product will be handled.  And given copyright laws and other issues, it's often in their best interest to maintain those rights when it comes to a product such as Freeloader.  That product, and any other that permits the playing of games from another region, did allow individuals to break the law, and very few companies like to be known for allowing that.

As for blocking out existing memory cards with a firmware update, well, that's an entire different matter, now isn't it?  Notice me commenting on it before?  No?  Why?  Because Sony doesn't have the legal responsibility to do that.  Whether or not they have the legal right is something I cannot speak for, but I can say the situation is entirely different from what Nintendo did because Sony didn't try to get rid of a product (assuming the Magic Gate situation is what you are implying here) that was infringing upon IP rights and international copyright laws.

This is pocket change to Microsoft. And I'm not being witty. It really is. No effect on any part of Microsoft's business whatever, unless customers start to boycott MS because they don't trust them anymore. But common, that's not going to happen.