I've been the technical guy in a meeting where this kind of nonsense was decided...
Me: The customer has asked for security measures to stop unauthorised employees from subverting the system and defrauding them. Your solution uses clear-text passwords, so anyone with a copy of Wireshark could crack it in seconds.
Management: Yeah, but they're only asking for the appearance of security. They don't care about the details.
Me: What will they say if someone cracks our "security" and steals millions of dollars from them?
I don't get it from economical point of view. It's just additional work that doesn't bring any profits. Sole exception I could think of, is securing software-based limitations that "encourage" consumers to purchase more pricey devices. But it doesn't seem to be the case for this device - there aren't much of fancy hardware features hiding behind missing software options. One could probably solder an USB port (not sure whenever soldering and rebuilding firmware worth the savings from buying cheaper device), but I guess that's about it.
If there is a possibility to flash in a third party firmware, there is also possibility to brick the device.
It brings up costs of customer support, company needs to replace faulty devices, repair them or argue with customers over it. Also a third party firmware brings no benefit in the eyes of the corporation, device was already sold(thanks to marketing and low price) and now comes device bricking firmware that inflates costs and eats margins. It's very easy to see why someone would like to defend himself against such menace. Sometimes in spite of the fact, that a third party firmware was the only reason why so many devices were sold in the first place.
I have heard a rumour, that for the same reason SanDisk stopped supporting(with free hardware) Rockbox development.
Supporting (or at least not actively stopping) third-party firmware can also make sense for a company like Linksys not that they aren't part of Cisco.
Before somebody could purchase a less expensive Linksys wireless router, install a third-party firmware, and use it like the would a more expensive Cisco AP. So for Cisco this might take away from their higher end lines. For the new owners it's just an added sale that they wouldn't otherwise get.
It's too bad that HTC didn't get how important their XDA supporters were to staying relevant in the mindshare of the early adopters, who in turn recommend hardware purchases for the mainstream consumer. It's the same thing with Linksys.
