Could Windows on a thumb drive = Microsoft StartKey?

In reading News.com's Ina Fried's blog post about Microsoft mulling the delivery of Windows 7 on a thumb drive, I couldn't help but remember Microsoft's StartKey project.

I wrote about Microsoft StartKey last year. My sources described it to me, at the time, as a "Windows companion on a stick." From my March 2008 post:

"Microsoft is working on turning USB-based flash drives into a 'Windows companion' — a new product known as 'StartKey' — that will allow users to carry their Windows and Windows Live settings with them.

"StartKey isn’t just for USB sticks; it also will work on other flash-storage devices, like SD memory cards. Microsoft is looking to turn these intelligent storage devices portable 'computing companions' for users in both developed and emerging markets, with availability (at least in beta form) likely before the end of this year, according to sources who asked not to be named....

"StartKey has its roots in an agreement Microsoft forged with SanDisk in May 2007. Microsoft announced it would be providing unspecified software to replace the U3 Smart Technology that was included on SanDisk flash devices. U3’s technology enabled users to store files, applications and related settings on their USB sticks."

Microsoft never did launch a beta of StartKey (at least not a public one), to my knowledge. But maybe it is rethinking how/if that technology could be used to distribute Windows 7, especially for netbook low-cost small notebook PC customers.

What's your take? Do you think the Softies are likely to make Windows 7, especially Starter Edition, available on a thumb drive? Or are they more likely to make portable StartKeys some kind of Windows 7 companion devices? Could the two be related somehow?