Microsoft thought the way you do for years after the iPhone came out. They thought they’d be fine competing using CE based systems. They completely underestimated the advantages a modern, secure, pre-emptive multitasking OS with proper process isolation, fine grained multi threading, and all the other features you get that a workstation class Unix OS bring to the table. That 8MB footprint sound great, until you consider all the things you’re giving up in order to hit that target.