Or for $299 I can get an XBOX with lots of apps, Netflix, Hulu, and 250GB of space.
Or for $99 dollars I can get an Apple TV with Netflix and iTunes rentals.
Or for $79 I can get a Roku with USB, and buy an external drive with 250GB at $100 ($179 total) and get Netflix, Amazon, and Hulu.
Or for $299, I can get Google Nexus Q with 16GB of space and no apps yet.
It seems like the Q (despite the pretty blatant mispricing -- I agree that they'll move essentially zero of these at $300) has at least a new mix of features to try. The built-in amp makes it an attractive audio box at least. The idea of driving content from the handsets in the room seems better to me than the (IMHO ridiculous) idea the TV vendors have of making handsets into "remote".
The lack of storage isn't really a problem if everything is sourced from the cloud (which it is already for most of those gadgets anyway). And the "no apps" is silly -- it's an android box. Though I didn't see much about a UI metaphor. Obviously the HDMI display isn't going to be a touchscreen, but you can always plug in a keyboard and mouse (this works today on your GNex if you have the right cable).
Obviously these devices "could" replace the legacy content delivery systems. But they aren't yet, and frankly their grown numbers aren't going to get them there any time this decade. It needs something more.
Besides that, I think that almost all of the set-top boxes blow away the boxes of the carriers on practically every front.
The consoles are guzzlers - with the exception perhaps of the Wii.
I disagree. I think there's lots of interesting and cool tech in HTPCs and HTPCs in tiny TV boxes. I just think it's hard to supplant the cable company's box that contains crappy DVR when it is required to watch television anyway. Most people don't want to go through any more layers than they have to.
As far as I know, "innovation" to break that chokehold would result in massive legal battles with uncertain outcomes. One way around it would be to put a Blu-ray drive in Boxee et al and slip the boxes in as Blu-ray players, but then you still can't decode cable signals and use DVR features for TV. Even if the set-top boxes can somehow get approval to decode Blu-ray media, there is no way the media companies would let you e.g. rip your movies onto the box, making them effectively expensive Blu-ray players with worthless, empty hard drives.
All of our content is on demand.
The only reason we can't see CBS shows is that CBS chooses to spurn AppleTV for strategic reasons that will probably prove wrongheaded. Similarly HBO is probably bound by contracts.
Comcast minimal cable TV (we don't use the TV except for the bundle cost) bundled with cable is $60/month. Verizon FiOS (which we'll be getting at our next place) offers phone with Internet for $50/month.
Either with a basic digital cable supporting two TVs would be north of $110 even with special offers.
What you have is "cheaper TV with a few holes", and that's great for you. But that's not what the market wants -- believe it or not they want to pay that $100/month, because that's what they're doing already, and it works for them. The winning product needs to take that $100 and do something better for the consumer (or conversely, produce a cheaper product with no visible disadvantages at all).