There's something mysterious about the new Apple TV—a black hockey puck-size box that connects to your hi-def set. It's from Apple (AAPL), so it must be cool, right? What does it do, though? The answer: Some entertaining stuff right now, and maybe a lot more down the line.
Apple has been nibbling around the edges of the living room for years with Apple TV, originally a set-top box that stored and played purchased movies and that Chairman Steve Jobs called a "hobby." The new Apple TV has been shrunk to a quarter of its former size, the price has been slashed from $229 to $99, and, most important, it no longer includes a hard disk to store video. Apple TV is now built around its ability to use your home Wi-Fi network to stream high-definition movies and shows, photos, and music—from online sources or your computer—to your television.
Setup is easy: Connect it to your set via an HDMI cable and plug in the power. Then just follow the on-screen instructions to introduce it to your Wi-Fi network and iTunes Music Store account. Instead of using Apple TV's included remote control to key in your password letter by letter on the big screen, download Apple's free Remote app for your iPad, iPhone, or iPod Touch, and enter your text from there. (It's particularly useful if your user name is 11 letters long.)
With no way to store purchased content on the new Apple TV, you'll probably use it mostly to view movies and shows rented from the iTunes Store. The movie selection has thousands of HD titles starting at $3.99. The TV selection, however, is limited: The only major U.S. networks signed on to Apple's 99 cents-an-episode menu are Fox (NWS) and ABC (DIS). (Jobs is the largest shareholder in Walt Disney (DIS), ABC's owner.) Once you rent something, you have 30 days to start watching it, then 24 hours (for movies) or 48 hours (for TV shows) to finish. There are a few other programming sources. Netflix (NFLX) customers can get access to its Watch Instantly movies and TV shows straight from the device; and Apple TV can also tap into YouTube (GOOG) videos, podcasts, and Internet radio. It even makes it easy to view movies and photos stored on your computer.
Apple TV's 720p-quality video provides a consistently crisp, smooth picture, with none of the stuttering that sometimes mars streamed content. The one blemish I encountered was that the device occasionally grossly overstated how long it would take to begin watching a movie after selecting it. In one case it gave me an estimated wait time of 371 minutes, when the actual delay was less than four minutes. Other movies began playing in a minute or two. Apple claims momentary glitches in my Internet service might have been to blame for the erroneous warnings.
This being Apple, more slick functions are on the way. After a software update promised for next month, you'll be able to stream video to the Apple TV from an iPad, iPhone, or iPod Touch. You can begin a movie on a mobile device, walk into your home, and—voilà—have it appear on the big screen in your den. (Unfortunately, the process won't work in reverse.)
Apple TV may turn out to be a Trojan Horse—a deceptively simple gadget that, once in the home, expands its functionality until it takes control of everything. Or it may prove to be the first step toward an Apple-branded television set. Either way, it's no longer just a hobby.
The device ($99) allows users to stream movies, television shows, radio, music, and pictures over a Wi-Fi connection