Apple's (NASDAQ: AAPL) CEO Tim Cook said recently that the company sold 2.8 million units of the Apple TV set-top box so far in 2012, beating last years numbers by a long shot. Meanwhile, Microsoft (NASDAQ: MFST) went out of their way to point out that Apple TV numbers pale in comparison to its Xbox 360 console. The stage is now set for a showdown between the two companies, as they compete in the living room.

We're in gaming now, said Cook, "One of the prime reasons buy an iPod touch is gaming. I realize that's not the big screen that you're talking about, but gaming has evolved a bit. You have more people playing games on portable devices than on the big screen TV now, so where we might go in the future . . . you know, we'll see."

Earlier today, a rumor went out that Apple is readying a more feature-rich version of Apple TV. If so, it might put a dent in Microsoft's plans for the Xbox, which they hope will be their main platform for streaming entertainment.