iTV needs to be another device in a long line of hardware that woos you. With it pinned to the wall of your living room, it will need to make you feel as cool as you feel when you extract your iPhone from your hip pocket. That's what drives mass market, mainstream sales -- not embedded features that you can get elsewhere, albeit not as well done. And, again, I'm not talking about creative types from the Apple cult or the education market; I am talking about the average, everyday iPod owner.
It sounds hipster cool when a rich hedge fund guy calls Apple a software company, not a hardware company. If you're an investor, take those words (like anything else, for that matter) with a grain of salt.
If and when Apple releases a new piece of hardware that's not incredibly well-received, expect the stock to tank. If this leads to anything resembling a slowdown in revenue, run for your life because Apple's glory days might have passed them by.
No matter what anybody tries to tell you, the ecosystem will not stop this from happening or salvage a less-than-amazing product launch and run.