Every company has failed products.
If you check out the AllThingsDigital interview with Jobs he is very aware of what the challenges with Apple TV is.
http://allthingsd.com/20100607/steve-jobs-at-d8-the-full-unc...
But here is the difference again.
He isn't abandoning it. In fact the new Apple TV is an attempt at solving that problem. Or put another way. He wanted to solve it.
Every company has failed products.