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Apple TV: Still a hobby after all these years

Apple downsizes the device and the price and adds a few interesting new features, but comes short of introducing a product that will be a category changer.

The new Apple TV is smaller than ever and has a new $99 price tag.
The new Apple TV is smaller than ever and has a new $99 price tag. Donald Bell/CNET

Apple dusted off its four-year-old Apple TV "hobby" on Wednesday and gave it some polish. But even with a lower price tag, a smaller, sleeker design, and a few more bells and whistles, the streaming set-top box is still likely to remain a side project.

Steve Jobs even referred to it as such when he introduced it at the annual fall event held in San Francisco Wednesday. In place of his famous "One more thing," he said, "One more hobby" when introducing the latest version of Apple TV.

There were some interesting new features: the new Apple TV is a quarter of the size of the old model, got a very attractive price cut (from $229 to $99), and added Netflix integration. But none of those things automatically put Apple in the driver's seat when it comes to this nascent category.

Apple's music event

Here's a brief rundown of what Apple announced at Wednesday's press event.

iOS 4.1
Free update for iPhone, iPod Touch will be available next week

iOS 4.2
To come in November

New iPods
A major refresh of iPod lineup, including the Shuffle, Nano, and Touch

New iTunes 10 with social-networking music features

Apple TV
New, smaller cloud-based Apple TV

For more details on these announcements, read our summary post here.

There seems to be some interest from consumers in cutting the cord on cable TV (depending on whom you ask, that is) and being able to share content from a PC to a living room device. Shipments of Internet-enabled living room devices, which include Web-connected TVs, set-top boxes, and game consoles, are predicted to rise from 99.3 million sold in 2009 to 430 million by 2014, according to Forrester Research. But how exactly it should be done hasn't been figured out.

Apple has never publicly said how many Apple TVs it has sold, and they let it remain a mystery Wednesday when Steve Jobs said, "We've sold a lot, but it's never been a huge hit." But neither has a competitive product, he was quick to note.

The digital living room is clearly up for grabs. There have been companies trying to break through--like Roku, Boxee, and now Google with its upcoming Google TV--with set-top boxes. Even Samsung is making a move here, but by taking a different approach and trying to build its own platform with apps and content directly into TVs and Blu-ray players.

Though he listed some of the things he and his cohorts at Apple have learned about what customers want from a living room device over the past few years of Apple TV, Jobs still had no larger, articulated vision for Apple TV Wednesday.

He spent a lot of time talking about what doesn't work in the living room based on customer feedback. According to him, what people don't want: noisy, large set-top boxes; user-generated content; a computer in their living room; or to have to think about hard drive space.

Jobs emphasized that people specifically don't want a computer in their living room. That was his way of taking a swipe at Google, which is taking a Web-centric view of living room content consumption with Google TV. But Jobs' view might be why we didn't see the introduction of apps on Apple TV, as some had predicted. Apps are something associated with computers and other gadgets, so perhaps Apple doesn't want to give the impression that Apple TV is a mini computer.

What consumers do want, according to Jobs, is pretty straightforward: Hollywood-quality movies and TV shows ("people don't want amateur hour," he said), cheaper content, and to rent not own.

In that case, Apple has plenty of competition. Roku and PlayStation 3 and Xbox have integrated Netflix as well as Amazon Video on Demand content, plus other sources of Hollywood content. And while the 99-cent rental idea is interesting (and not unique--Amazon is offering the same thing), the content isn't quite there yet. When it comes to TV shows, only ABC and Fox have signed on with Apple.

For Apple, the main advantage and interest they have in advancing Apple TV is that it adds to the overall ecosystem the company is building with its "iDevices" and its library of music, video, photo, podcast, and book content. Apple now has a phone, music/video player, touch-screen tablet, computer, and now living room device to share content between via a coming feature in iOS 4.2 called Airplay.

Now that the price is fairly reasonable, the ultimate success of Apple TV is going to rely on the kind of content people can get and the timetable in which they can get it. And that means working out licensing issues with content owners. That's something Jobs has pioneered before, so it's not impossible that he won't do it again.