Even the CNN article now says it is Be (Score 1)

iToaster, scheduled to be available July 15, will not be a``Linux machine'' as people normally use the term, despite earlier published reports to the contrary. Rather, the OS is based partly on BeOS, with its multimedia efficiency,

and partly on Linux, with its stability and Internet efficiency...

So basically some people in marketing thought that since Microworkz set this machine up to be stable and to network efficiently, and since Linux is known for stability and network efficiency, that they could say that the system was Linux based. A rather unwise thing to say when a community of supports is willing to pounce on anyone who tries to purloin GPLed code.