Updated from 3:20 p.m. EDT Will couch potatoes make room for an Apple?

Investors will get their first hints at an answer to that question this January, when Apple ( AAPL) makes its first big foray into the living room.

As company CEO Steve Jobs announced last week , Apple plans to introduce at the very beginning of the year a device code-named iTV that will enable users to stream the digital content on their computers -- movies, music, photographs -- to their home entertainment systems.

Industry analysts are intrigued by the device and say it could be a key building block in creating the digital living room . But don't expect iTV to be a runaway hit a la Apple's iPods, they say.

"For them to come out with this product validates this idea in general. It recognizes that people want to start to move their digital media around," says Stephen Baker, an analyst with market research firm NPD.

But iTV is a very early attempt to address a nascent market, Baker says, suggesting that iTV could go a long way toward establishing a market for devices that connect consumers' computers to their home entertainment systems.

Many analysts believe that hardware for, and services that deliver content to, the digital living room will eventually be a huge market -- potentially replacing sales of products such as CD and DVD players and discs, and conventional cable TV.

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