Ovum dismissed the plans as too complex, too expensive and unable to offer any advantages compared with single-function, discrete devices such as personal video recorders.
The scathing comments come after AMD announced new products, OEM reference designs and software for its Live initiative at last week's Consumer Electronics Show in Las Vegas.
Part of the announcement included AMD's Live Home Cinema system, which the PC industry has tried unsuccessfully to convince consumers is the next 'must have' in the living room.
"The last time I wrote about AMD Live and Intel Viiv, I gave AMD credit for not actively pursuing living room PCs. That has changed," said Carl Gressum, senior analyst at Ovum.
"In my opinion, AMD should focus on what it does well - semiconductors - not on developing living room PCs."
The analyst maintained that AMD's initiative fails to address the PC's two main faults: the complexity of its underlying architecture; and the fact that the market is not interested at all in letting the PC control the TV.
Gressum went on to note that the PC platform is "plagued" by malware, spyware, viruses and Trojan horses, and that consumers do not want to deal with these problems in the living room.
"Even if the PC platform can handle TV and video applications, it does not mean, from a consumer perspective, that it is the most appropriate platform to sit underneath the television," he added.
"There is a market for a more advanced TV device than a dumb set-top box or DVD player, but this device will not be a PC."
If AMD's goal is to develop this market, the company needs to change the operating system requirements to include embedded systems, according to Gressum.
It also needs to consider whether it is worthwhile to invest resources and foster industry relationships in a market where the biggest OEMs have largely failed.
"Stick to the semiconductor industry, AMD. That is what you are good at," Gressum advised.
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