Michael Gartenberg at Macworld says:
"Apple TV sometimes feels like the Rodney Dangerfield of Apple products: it gets no respect. No less than Steve Jobs calls it not a product line, but a hobby. Hobbies are funny, though. Stick with one long enough and it can transform from side interest to full-time business."
Gartenberg's conclusion seems on the money as Apple has just announced that it has sold a million new Apple TVs in about 80 days. (To put this in context as a significant number Windows fan sites are jumping up and down when Microsoft proudly announced they have sold 1.5m WP7 phones in 6 weeks with 10 different phones on 60 carriers in 30 countries. Considering Apple TV is/was a 'hobby' and WP7 a major platform initiative with a 500 million ad budget... )
Gartenberg continues : "The key to Apple’s current success lies in what Apple TV aspires to do. For now, Apple is content with having the Apple TV live on input two of your TV. Input two is where your VCR or DVD player used to live, and right now it’s a port that’s up for grabs. (Google’s approach with Google TV, on the other hand, seems to be to attack TV input one. That’s a vastly more difficult hill to climb.)" This last bit seems to jive with Google TV being voted one of WSJ Mossberg's Worst Products of 2010 (see article on this blog) and AppleInsider has written an article "Apple TV challenge from Google falls flat in 2010" where it says manufacturers like Logitech have suspended shipments due to poor sales and others like Sony have slashed prices.
Apple TV seems off to good start for it's fresh assault on living rooms but personally I think one of the challenges would be to convince media producers to supply content. Media companies seemed spooked by what happened to the music industry and iTunes (iTunes now being the biggest music retailer in the world) and conceding too much power to Apple. (Media companies are so worried about Apple that they have tried all kinds of ways to weaken Apple's hold, Apple executives have claimed that music labels sell music to Apple at higher prices than to Amazon but that's grist for another article) Steve Job's plan of integrating Apple TV with Netflix etc seems a good stopgap to solve this.