Apple TV Set for Prime Time

If Apple TV achieves 20% to 30% of the addressable market in the next three to four years, it could drive incremental revenue by about $5 billion to $7 billion, according to Whitmore.

Apple TV, introduced in Steve Jobs' January keynote address, was originally scheduled to ship in February but had to be pushed back for reasons the Cupertino, Calif.-based company never made entirely clear.

The product lets users wirelessly stream videos and music stored on their PCs onto their television sets. The box also can store 40 gigabytes of content or 50 hours of video.

"It is part of Apple's overall expansion and attempt to move away from the world of PCs to consumer electronics in the living room," says Crotty.

Other companies that are battling for control of the living room include PC makers, such as Dell, that use Microsoft's(MSFT Quote)Windows-based Media Center PCs, and gaming console manufacturers such as Sony(SNE Quote), with its latest PlayStation 3.

Apple TV's rivals, in addition to set-top box manufacturers, include digital-video recording company TiVo(TIVO Quote).

"Apple TV is part of an overall trend away from distribution of content by physical media," says Crotty. "Increasingly, a lot of content is being consumed through the PC, and it has been difficult to move it to living room. But Apple TV is a very simple solution for that."