MCE's challenge (at the time) was the cable networks death grip on the signal. It took years for CableCARD to surface, and even then it was limited in its deployment geographically and provider wise. If that had been solved much quicker I bet we would have seen a larger MCE ecosystem form. Nowadays the world is moving on to online streaming which presents other challenges. Looking at Boxee's solution shows how hard it is to get it to work as smooth as possible. Apple is besting it by brokering deals with content providers, perhaps something Microsoft should have pursued earlier. It's tough when you've heard the internal vision of what it could have been and seen what is has become. There was so much not brought to the public that would have made MCE a staple in the home theatre.

MCE shares its victimhood at the hands of content companies with the other media center solutions, like MythTV, XBMC, etc. The lack of a simple way to get cable TV into the PC (coupled with lawsuits targeting automated commercial skipping, etc.) relegated HTPC use to the brave few who were willing to set up IR blasters on their cable boxes or just download content instead of recording it.

It is the geek's torment to remember always what could have been, and suffer under what really is, thanks to the mighty powers that be (in this context the content companies, patent holders, etc.).

WHS was a great idea tied to an awful implementation. I installed a copy through MAPS at work, and I think it lasted all of 15 minutes before I dismissed it entirely; it looked like very little more than Windows Server 2003 with some weakly integrated automation sitting on top.