At least they're still making the ATV, unlike the iPod Hifi. It's easy to look at the more famous failures but to me, this one was a notable and recent failure to extend the strength of their consumer brand into a field full of competitors.
I purchased one and am still very happy with it for what it does and how it sounds, but for too many people it was far too expensive and didn't offer enough bells and whistles. However, I thought it was excellent value considering how well it's built and its audio quality for something that size.
Looking back, I'm not sure what Apple were thinking.