Apple TV Should Get a Nice Reception

During Apple's (Nasdaq: AAPL) media announcement last week, CEO Steve Jobs said two critically important things about Apple TV, the first of which was this: Apple TV owners love their Apple TVs.

"They absolutely love them -- and use them a lot," he stressed.

I'm one of these Apple TV lovers, and I have been for the last three-plus years. My old 40 GB Apple TV is simple, elegant and just works. For non-Apple TV lovers, the product is an HDTV bridge device that lets you buy or rent movies and TV shows, watch podcasts, view photos, and listen to music -- all through the big-screen TV that is the portal to many living rooms.

Apple has updated the Apple TV interface a few times, but it does have limitations. It's not a full-blown home theater PC (HTPC); it doesn't let you surf the Web or check your email; it doesn't let you browse and view any Web-based streaming media service. It can be hacked to stream more kinds of Web video and act more like a Mac, and its hard drive can be upgraded to hold more content -- but hacking, modding and upgrading is not without significant effort for regular tech gadget consumers.

Still, my Apple TV has seen a lot of use over the years -- plenty of bought and rented movies, purchased TV shows, a little YouTube action here and there, including a guy who was over for a barbecue who was proud to show off his YouTube clip of the jumping of his motorcycle over a raging campfire at night. For one brief, shining moment under the flickering light of my HDTV, the guy was a star.

For everyday use, my Apple TV has delivered thousands of photos and dozens of home videos. At my house, there isn't an old-school sticky-paged photo album book to be found.

The New Price Point

One of the flaws of the first generation Apple TV was its price. Before Apple's announcement, it cost US$229. And while that's less than its $299 debut, a couple hundred dollars is a lot of money to experiment with for most consumers. The new Apple TV loses the old hard drive, is 80 percent smaller, and comes with a tantalizing $99 price tag. Instead of facing $2.99 to purchase an HD television show, it'll cost $.99 to rent it. At this price, you could watch one show multiple times and still come out ahead. The economics for renting movies vs. buying them comes out nicely too, with the exception of movies made for children, which tend to be watched over and over again.

All by itself, the new hardware price should spark some new sales. On a few days each month, Apple reports, more than a million people enter Apple Retail Stores. With that kind of consumer traction, a lot of people are going to see the new little black box and wonder what it is, which is a short step to learning what it does.

A Streaming Phenom

For reasons I don't quite understand, my Apple TV can essentially stream a rented movie better than other services I've tried on my lowly 3 Mbps home DSL connection. The quality is better, and hiccups or pausing is essentially non-existent. As I understand it, the Apple TV starts downloading a rented movie but makes it ready to play before it's completely downloaded. Essentially, this is sort of like streaming content, which sends data to a buffer, so it's ready in advance to be consumed by the device.

Apple's implementation isn't exactly streaming, but seriously, we're talking lemons and limes, right -- both are still citrus fruits. Close enough. The end result is that the old and slow processor inside my Apple TV delivers better than a relatively new Mac, PC, Roku box, or Xbox 360 that's streaming Netflix (Nasdaq: NFLX) content or Web-based video. I'm just saying. The Apple TV delivers sharper video, faster and more easily. All this leads me to believe that Apple's new streaming-only rental model with the new Apple TV will work just fine for most broadband-using consumers.

Speaking of the rental-only model -- which is the way you'll be able to consume content directly from the new Apple TV -- I'm not sure if this is simply a response to consumer demand or an effort to get around a pesky problem: storage management. In his presentation, Jobs noted that consumers don't like to have to worry about storing their movies and television shows. He's almost got this right -- more to the point, consumers don't like to run out of hard drive space. Right now, I've got over two dozen gigabytes of photos on my MacBook. I've got a 320 GB hard drive with just 40 GB of open space left. Most of my hard drive space is eaten up by movies, TV shows, and home video. Plus, I've got I don't know how many other movies stored on an external hard drive. Now, I can go through some storage gymnastics and create an iTunes library on a home network connected storage device, but then that content won't go with my MacBook wherever my MacBook goes. I'll probably end up upgrading to a 500GB hard drive or buy a new MacBook with a bigger hard drive. Either way, at this point in figuring out storage solutions, most consumers' eyes have already glazed over.

Apple could essentially solve this problem by letting consumers attach USB hard drives to their Apple TVs and let them store their content on the hard drive, letting the consumers buy bigger hard drives when they get full. The problem with external hard drives is that, to save energy, they fall asleep, and they don't always wake up nicely when devices try to find them and talk to them. Sure, all of this can be fixed, but the reality is, it's not simple for most consumers. Do you really want your mother calling you up because she started rewatching the entire series of "Lost" but her Apple TV won't work, when in fact, an attached hard drive is just asleep and apparently unconnected?

A similar problem happens with my MacBook when I want to stream content. If my MacBook falls asleep, my Apple TV is disconnected from it.

All of this is a bit irritating, but hardly unexpected.

Of course, an HTPC solves these problems nicely. They come with really smart, extensible operating systems. If you want it to wake up, it's not off in some other room of the house. The downside is the cost. The downside is the keyboard. The downside is the possible fan noise, heat, and generally larger form factor. Sure, the Mac mini is small, but it's still spendy for a Mac to connect to you TV. I'm on the fence on this. I would like to connect a Mac mini to my HDTV, and yet, the second critical thing Jobs said about the Apple TV comes into play here, even for me, as a consumer:

"They don't want a computer on their TV. They have computers," Jobs explained. "They go to their widescreen TVs for entertainment, not to have another computer. This is a hard one for people in the computer industry to understand, but it's really easy for consumers to understand -- they get it."

I don't really want to do email on my TV from my couch. At first thought, it sounds cool. On second thought, I already spend far too many hours with email as it is. Same goes for Web browsing. And for families, who wants to walk into the living room with a nice turkey sandwich and a fresh Diet Coke and find a family member surfing the Web? Hey, most times, the TV needs to be a TV!

It's Only Going to Get Better

Right now, if I rent a movie from the convenience of my Apple TV, I can't transfer that rental to my iPhone, iPod touch or Mac. If I rent from my iPhone or Mac, for example, I can transfer it to my Apple TV. I don't know why there's not total reciprocity here, and either way, I have to wait for the entire movie or TV show file to transfer from one device to another. It's a pain. Of course, there's a bit of an inelegant solution: The $49 Apple Component AV Cable. It lets you connect your iPhone or iPod touch to an HDTV and show your content on the big screen. In some ways, it covers the basics of an Apple TV, but comes with better portability. If you run out of gas in your living room, you can disconnect your iPhone from the Apple Component AV Cable and take your iPhone to bed to finish your movie. Easy. Apple could have created an elegant docking system for the iPhone, iPod touch, or iPad, and I half expected the company to do it.

But they've got something even better on the way, come November with the release of iOS 4.2: wireless streaming. With iOS 4.2, Apple TV owners will be able to rent a video on their iPhone and then stream it easily to their big screen TV. An iPad, for example, can remain docked on the kitchen table, and it can still stream to the living room. Easy access, easy portability.

And that's not all. You'll be able to stream other content as well.

"You're going to be able to come home with a bunch of photos on your iPhone, push a button on your iPhone, and see a slide show on your Apple TV," Jobs said. "It's going to be pretty cool."

Pretty cool? That's an understatement. It's going to be freakin' wicked cool. I can't wait.