Suppose Apple came out in 2009/2010 and introduced a new Apple TV with a built-in full Extra-Large Widescreen Cinema Display (models starting at 42"). It would provide all the features the current Apple TV has (sync with Mac, buy movies/music, etc..) plus have all the inputs a normal LCD screen would have (HDMI, DVI, AV, DVR [maybe], etc).
Sure it's a stretch, but would you buy it? And further, do you think Apple will ever branch this far? Or just stick with the console? And if they did, would it be successful. Hmm...
I don't think this would be a very good idea.
Apple isn't in the TV business, and it's such a competitive business that their margins would be shredded to hell... forcing them to take shortcuts on their industrial design and quality control, which would in turn hurt the brand image and reputation.
The additional problem here is one of modularity. What if I want a 54" LCOS TV? What if I want a 110" projection screen? What if I want a 19" TV?
Not only does Apple operate in a price bracket where people expect hi-fi components to be separates, and their core demographic willingly pays a premium for higher quality separates versus lower quality "package" systems... and I know that seems contradictory to their computer strategy but computers involve different product psychology... but for Apple this would be a product that could be easily undercut by competitors, scoffed at by critics, and hated by consumers.
Instead, I think their best strategy is to increase the cross-compatibility of AppleTV. That seems to be their plan based on various patent filings. AppleTV is a media bridge, not a media output device. In the long term, its greatness will unfold with a growing ability to connect to more types of input sources and output devices, and multiples on both sides... as well as the ability to facilitate, eventually, WAN to Internet streaming (say from your LAN to your iPhone while on the road).
That would make AppleTV far more valuable and restrict it to an atmosphere of product design where Apple really knows what they're doing. They're not in the business of selling TV's, and when you consider how much more their displays cost than the competition, a TV from them is not going to fare well in a market that is ridiculously competitive and introduces new models every five minutes.
The whole idea of the AppleTV is to be somewhere in the middle between your home theater and your network, bridging the capabilities of both for a greater user experience.
