Interesting information point to add: Chumby designed a product for Best Buy (the Insignia Infocast). Not sure how successful it was, but I'm pretty sure that there are a lot of details that we are not privy to.
The Infocast 3.5" (basically the chumby One in a different box)
The Infocast 8" (basically the chumby 8 in a different box, though the Infocast 8" preceded the release of the chumby 8)
An Insignia/TIVO co-branded television set (TIVO did the main UI for that device, but it didn't have DVR capability) and chumby did a bunch of apps for it.
So, yeah, Best Buy actually outsources development of a lot of products under the Insignia, Rocketfish, Dynex, etc brands, so this business being suggested isn't new to them... they are already in it. But they generally just make "me too" products with this model, I don't think they have the will nor the vision to fund truly groundbreaking CE work.
Unlike those other companies, Chumby didn't have the cash or the product-line diversity to put up any kind of a fight. If they had survived, they'd eventually find themselves running Android on commodity hardware, just like everyone else at the low end of the market for consumer gadgets is eventually going to have to.
Part of the problem was that Best Buy didn't know where to put the thing, nor how to market it. The 3.5" model was sitting next to the alarm clocks. The larger 8" model was sitting next to the Sony Dash in the picture frame area. You can figure out the rest from there.