It's the wrong time in the upgrade cycle for home TVs to do that - everyone just bought a new flatscreen LCD HDTV during the past two years and sales are flat in that sector. Introducing an AppleTV with screen would be an uphill battle to convince people to replace a device they're still pretty happy with (and still paying off.)
"everyone" didn't. I know a number of holdouts (myself included) who are still waiting. When the next big thing comes along, another portion of us will take the plunge.
Sure, but an increasingly small portion. And quite a few of you won't until the next big thing, and so on for quite a while; there will be people without a flatscreen in their residence in 2020 but I wouldn't recommend building a business on convincing them to change their mind. No, the situation in 2011 isn't like that, obviously; this is a rhetorical point made for seeing the situation I'm describing in a time when it is perfectly clear. Today isn't to that extreme, the point is that already that market has peaked.
Besides, an Apple TV that doesn't require HD, which would not be that much more effort, would also work for anyone with a TV, so it really doesn't make sense to me to only make this an integrated product.
