The only place I've seen a 169.254.x.x ip address is on ms products when they fail to get an IP from a DHCP server.

The range of IP addresses is that specified in the UPnP (universal plug and play) spec, to be used when other methods to find the IP address have failed.

In this case the unit is clearly failing to get it's IP address via DHCP for some reason. Answering "why" is much more difficult.
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