Why not make one device? Call it Apple TV Plus and simply combine all those features into one. The only concern I can see is having two devices competing for a limited stream.
The bigger problem is that people who just want a router won't want to pay $600 for one, just like people who just want a network hard drive, or people who just want to add some remote speakers to their existing network.
The product you're describing is a Mac mini. Almost literally. Front Row, expandable storage, network sharing, connection to home theaters.
As it is now to get all the functionality Apple wants to sell you a little at a time you have to spend around $600. Am all in one could be profitable at $400
Not a chance. The consumer electronics products work because each one can be run on lean, cheaper hardware. Adding functions together and expecting them to run simultaneously ups the hardware requirements right into the Mac mini range and provides a single point of failure, along with requiring that all the desired services/connections be located in one place in your home. It also makes expansion cost-prohibitive. Tremendously so.
Heck, add a "stack" option where you have a populatable unit for optical drive, spare HD, dock, other I/O options. The "new cube".
That's not a bad idea, but cooling the stack would become a serious problem.
Not including AirTunes with the Airport Extreme base station is a terrible oversight.
I disagree. I think AirTunes should literally be a wireless device to add to a current network, and much cheaper. People don't necessarily keep their routers near their speakers, and most anyone who buys one of these already has a wireless network, so making it function as a base station seems superfluous to me. I'd much rather see a $49 AirTunes device (and kill the Airport Express) than see it added to the Airport Extreme.
$199 for the old 40 GB isn't that bad but I'm sure you can find a better deal elsewhere.
Not really, though I wish it were so. They're still going for $200 on eBay, and before this update, $250 was about the lowest price for a new one. This is an even tighter margin product now, which you can tell from the closeness of the refurb price (and the fact that the product was already Apple's thinnest, margin-wise).
$229 undercut all the other Internet resellers--and doesn't leave much, if any, room for anyone else to squeeze out a better price. Most of those deals were because the stock was slow-moving. At the new price, sales will pick up and remove the incentive for third parties to discount.