i didn't say anything about not using industry standards, nor did i mention VMs. my comment was regarding netbooks and how much easier it would be for people to be able to install an operating system on a netbook (which don't come with an optical drive) FROM a USB thumb drive.
the .iso format (iso9660) is for CD/DVD media.
netbooks don't come CD/DVD drives.
that leaves you with the following choices for installation media: external CD/DVD drive or thumb drive (i know... network install is in that list too, but getting the wireless network up and running on a netbook before installing can be a bit much).
i downloaded a .img file of PC-BSD the other day. dd dumped it to my thumb drive, and i was up and running with a reboot to usb device.
look, the point is: microsoft needs to stay on top of things like an easier way to install to the quickly growing netbook market. if my options are 5 minutes worth of an ubuntu install (for free) vs. purchasing new hardware (external CD/DVD), to do a 1-2 hour windows install, for what? $100? $200?, on a machine that i only use for network fun; well... i'm afraid that i'd have to go for cheaper, faster, better over pricey, slow, and... well... slow.