So What?

It's a shot across the bow.  Companies move slowly, and
if the kernel folk were to do something drastic like say
"no more binary modules", many companies would see at as
a bolt from the blue and be looking prevent being
vulnerable to such a thing again.

With this formal heads-up, companies have time to react
in ways they find acceptable.

The people supplying these modules (and the people supplying a lot of open source ones, too)
are only really concerns with what will make them money (what they're not legally allowed to
do is simply something that has a high chance of future financial risk, so a special case).

So the question they ask is: Will binary modules provide us enough income to cover the cost of
developing them? That seems these days to mean: Will OEMs that care about Linux support use
our hardware if there's a binary driver for it but no open source driver?

Now, if hardware vendors think that OEMs will accept this letter as the basis for deciding
whether hardware is suitable for inclusion in Linux-friendly systems, then it will have a huge
effect: providing a binary driver won't get a vendor any new sales; it'll only make unhappy
customers a bit less unhappy, but no more likely to buy from them again, and it will primarily
benefit users who didn't make the purchasing decision anyway.

The letter avoids the disputable question of whether you're allowed to write binary-only
modules, in favor of the more clear and applicable question of whether there's any point to
writing binary-only modules, to which the answer really is: nVidia can probably get some
benefit out of it for the chipsets in the pipeline currently; otherwise, don't bother. (If it
were only a question of legality, vendors would all switch to providing binary-only drivers
for BSD, where it's obviously legal but just as obviously pointless; everybody who wants
drivers for BSD doesn't want binary-only drivers)

I agree - the statement oddly without an operational conclusion. I suppose it does help to be
on the record and that there probably are some companies that would be swayed by the authors'
intentions. 

I suspect that a US lawyer could raise this statement ("it's a bad idea and bad for your
customers") as a concession that such modules aren't prohibited by the license, simply because
the developers argued against their use without arguing they are prohibited. On the other
hand, it might be that in countries that observe authors' moral rights, this statement might
have some weight [IANAL].

[Disclaimer: As a non-kernel developer, my opinion doesn't matter, but I'll share it anyway in
the interests of full disclosure - I strongly support this statement and would advise anyone
who asked to not create binary-only kernel modules, but I also believe that they are almost
certainly fair use and not license violations.]

"furthermore, we believe that the kernel license should be
changed to prohibit such modules"

It'll never happen. Breaking core functionality (graphics drivers, WiFi drivers, etc) on such
a wide scale would hurt users and make the community look utterly stupid. Totally
counter-productive.