Have you looked at the patents that Apple have filed for the LCDTV? Its insanely great. A set top box cant achieve that kind of stuff.
and
but it will have Apple design and chipsets in it that allow unique functionality.
Please enlighten us on what a big, thin metal & plastic box with a large screen can contain that an Apple set-top box hooked to someone else's big, thin metal & plastic box with a large screen can't. I'm serious. All along, I've been looking for the answer to "why do they have to build a whole television?" and all I seem to get are software-oriented answers that would work just as well in an

TV3.
What chipset functions can only function in a whole TV? What unique functionality is only possible in a whole TV?
That's the fundamental problem with this rumor. If you separate the software from the hardware (assuming an

TV3 is also available), the hardware must win buyers on its merits alone. Siri is software. Apps are software. iTunes is software. The hypothetical cable subscription killer is software. Why do they have to build a whole television that can't be done in an

TV3?
You keep saying integrated cable box. But the cablecos don't like that. They tried it once, do you see any such TVs available for sale now? No. Before that, the analog cable got merged into TV tuners, they hated that and were very happy to upgrade to digital that worked differently, even though it still had the same crappy picture. (digital <> HD) Then they were forced into cablecards, which they hate and do their best to not enforce, although the FCC does force them from time to time.
This is a major, major hurdle for anyone to overcome.
Exactly right. As usual- HERE- people just imagine whatever is necessary to make the rumored Apple thing work, ignoring the realities that other companies don't want to just cut their own throats to make Apple's new offerings fly. Particularly in this case- where the choice of cable supplier is often a SINGLE entity (or 3 if you count SATT players), what motivation do they have to pay Apple a subsidy to make this television a cheap purchase for us consumers? After all, if the rumor is that Apple will partner with ONE player in a market, you'd have to sign on with that ONE player if you wanted the subsidized price. Personally, I have DISH network as my video supplier but Comcast is the ONLY cable player in my area. If Apple bundled with Comcast to offer this TV at a subsidized price, I wouldn't want to switch from DISH to Comcast to get it (even if I was interested).
As I've said over and over. This television rumor is a mess. There needs to be something more to it than we're getting/dreaming. There needs to be something bigger than just another TV with a built-in

TV3 giving us Siri and gesture options. And I mean something a LOT bigger that somehow can't be done in a set-top box OR the set-top box dies and the only way to get an

TV3 is inside of this Apple Television. To me, that seems the most plausible play by Apple (to reunify Apple software with Apple hardware in an exclusive way), but Apple admitted with the gen 2 device that the price of gen 1 was too high for mass adoption. This concept would make the gen 3 version incorporate the cost of a whole HDTV. Total mess.