AppleTV is Apple's Xbox 360...
...minus the games; minus an integrated video service; minus video and audio chat; minus social networking; minus access to live television; In other words, Apple built media extender product at a price point comparable to Microsoft's Xbox 360, without any of the features that make the Xbox 360 a great experience.
Microsoft beat Apple to the punch in delivering on demand high definition television to the living room and they actually did it right out of the gate. Microsoft stores all that HD content in the cloud, so you can purchase a television show once and re-download it as many times as you want to ANY Xbox 360 you sign in to.
Sharing photos from your PC to your television? Xbox 360 can do it.
Sharing home movies from your PC to your television? Xbox 360 can do it.
Sharing music from your PC to your television? Xbox 360 can do it.
So when you could spend your hard earned $299 on something that under delivers, why not buy an Xbox 360 for the same price, slap on a hard drive for an extra $100 and actually get a fully immersive home entertainment experience?
Oh wait, I know - the Xbox 360 is made by Microsoft, so it couldn't possibly be cool. Or maybe it's that everyone thinks it's just a game console...