When I first was briefed on the Media Center edition of XP by Microsoft, I thought MCE was a pretty bad idea. A lot of my skepticism had to do with the market they claimed they were going after, namely college students in dorm rooms and yuppies living in cramped apartments with no room for both TVs and PCs. Of course, college students mostly buy laptops, and no matter where you live most folks don't watch TV on a small computer monitor from across the room. The short-term market were enthusiasts who understood the value of a DVR such as a TiVo.
Over time, Microsoft tried a few approaches with MCE – from extenders to allow you to view content on other TVs in the home over your network, to creating extender technology for Xbox (which is already hooked up to a TV set) – as well as working with a host of OEMs to create "living room" form factor home theater PCs. The result of these efforts was less than a stellar success and few vendors actively build home theater PCs; these days, if a consumer uses media center they're either an enthusiast or they've tripped over it by mistake trying to do something else. That's a shame, as MCE has evolved over time to become a great technology, one that few people even know exist.