American audiences often ask, "why would you want an embedded Ruby?"
You might as well ask "why would you want an embedded Python?"... the answer to that is fairly obvious to anyone who knows Python and C, and who has done embedded programming. So why is it less obvious to those same programmers why someone would want an embedded ruby?
In case you misunderstood: The above is not about running Linux off of a stored diskimage on an SD card. The ARM SoC in question fits in an SDcard. They're intended for e.g. putting in your camera so you can have wireless, wifi access to the images on the SDcard.
Other than that I agree - there's certainly still room for both. But the point is you can physically fit a Linux capable computer in an SDcard form factor, and drawing 100mA, which means the niches where smaller micro-controllers is the only alternative have narrowed accordingly.