Is it a product though? What can you do with it after you buy it besides paying Microsoft monthly for the rest of its lifetime to actually do something with it?
That's just a semantic game. It's a product. Services are products. Bank loans are products. Devices sold for narrower end goals than general purpose computing are still products. Cable TV boxes are products.
For enterprise IT, it's got some potential. Devices users can't muck with facilitate standard operating environments, hot desks, and similar practices that are already user hostile. In that setting, there's no big deal here. It's even got the chance to be less awfully intrusive than existing SOE software.
It's also, IMO, a bit of a leveraging of a monopoly position to crowd out those SOE vendors. Microsoft's the only one who can make this device; anyone else is stuck at best making a browser-only thin client and hoping 365 works well on it for long enough to recoup R&D costs and make bank on top. Not a fan of SOE vendors, but not a fan of monopoly control either.
Paradoxically, modern times seem bring more and more pseudo-products that can be purchased but cannot be actually owned (at least without resorting to unreasonable difficulties).
I'm pretty sure this is just part of a service.