I think we should look at market trends and market share after Apple TV is released and see what it does well and where it fails. The Apple product is not a DVR, but an extension for the downloadable media / purchased content environment, via iTunes. The MCE addresses DVR functionality, but with cable / sat providers offering cheap, almost free solutions, MCE is not really filling a market demand, but mostly catering to hobbyists and enthusiasts. The argument for an increase in this method / technology in the living room might be empty or proved false, by a reasonably potential scenario where iTunes and Apple TV dominates this space and MCE becomes a technical knockout with its HD CABLECARD support, but in practice a market oddity with respect to its sales as an "appliance". The second part of the argument, downloadable content and e-commerce, will in my estimates, be won decisively by Apple. So in the end, MCE will be a relatively expensive, complicated, and some would say, unreliable product, while the Apple will be a cheap, reliable, and tightly focused appliance, aimed at expanding its already established iTunes environment. Personally, I do not really see any real potential for MCE or more accurately, Vista, to break into this market. In many ways, I see Vista as the current generation of the "Windows ME" experience.

This only addresses one aspect of which your platform is based. It is not fair to compare mainspace consumer habits of a product with a customized implementation of that application in a high end space. However, any product that is tied into a product like MS / Vista / MCE, will inevitably be tied to marketspace / market health factors.