It's not that embarrassing if they get it to work well, write several patents on it, and then get Google, Samsung, et al to pay royalties for licensing them. On the other hand, MS could build their own wearable devices and use the technology.
I don't think its embarrassing. Their are often competitor products seen in their latest products advertising. For example their latest bluetooth keyboard ad is full of iPads.
Impossible to think of Apple showing Lumia phones in their ads.
