Think of the Apple TV as a networked iPod that connects to your wide-screen TV. It's bigger than an iPod, of course, but its 7.7-inch square unit is far smaller than an average DVD player or cable box.
The Apple TV is designed to interface only with wide-screen TVs--essentially, enhanced-definition (EDTVs) or high-definition (HDTVs) equipped with component or HDMI inputs. It can also connect to A/V receivers via HDMI, optical digital, or analog stereo connectors. In addition to the Ethernet port, it can connect to your home Wi-Fi network via its built-in 802.11n wireless capability. The USB port, however, is currently unused.
The Apple TV has an internal 40GB hard disk (33GB usable space) that can be synced with an iTunes library running on a single PC or Mac during the wizard-like setup process. But you can also stream music, movies, TV shows, and podcasts from as many as five additional computers as well.
Click on the Connect to New iTunes option on the Sources screen, and you're presented with a random 5-digit code. Enter that code into iTunes, and all of the music, TV shows, podcasts, and movies can instantly be browsed on and streamed to the Apple TV. (At this point, photos can be accessed only from the primary Apple TV source computer--because the images need to be processed, they can only be synced, not streamed.)
The Apple TV supports 480p (enhanced-definition) as well as 720p and 1080i (high-definition) output, and also international 50Hz derivations thereof. (If you have an older non-wide-screen TV that lacks component or HDMI inputs, you can't use Apple TV.) While the output resolution may be HD, however, keep in mind that the iTunes Store videos are not yet offered in high-def--so they can look pretty harsh on a big-screen TV.
The main Movies screen gives you access to all your iTunes-purchased movies (for us, The Incredibles and The Royal Tenenbaums), plus whatever other movie files you've imported into iTunes (a high-def 300 trailer we exported from QuickTime Pro). It also offers access to theatrical trailers and a quick overview of the top 10 movies on iTunes.
In addition to accessing the movies you've purchased in iTunes (or imported to the software from other sources), you can get an overview of the top titles on the iTunes Store with trailers that stream straight off the Web. However, the Apple TV doesn't provide access to the Store itself--if you find a movie you like, you'll need to return to your computer, buy it in iTunes, and wait for the download before you can enjoy it on the Apple TV.
Previews for current theatrical releases are also available. These are streamed straight from the Web. As with all Apple TV content, the left half of the screen shows the cover art--or in this case, movie poster--along with a short summary.
If the video hasn't been synced to the Apple TV's internal hard drive, it takes a few seconds to buffer before streaming begins. Playback is generally very smooth, but rewinding and fast-forwarding streaming content will be choppier than you'd get from, say, a DVD.
As you'd expect, the TV section is organized along the same lines as the movie section. Apple promises "near-DVD quality" for its iTunes video content, but we were generally underwhelmed by the picture quality of most movies and TV shows on a big-screen TV. They have the potential to look a lot better if and when Apple begins offering HD versions for sale. (Of course, that will require you to rebuy anything you'd want to see in higher resolution.)
Apple's iTunes and iPod have their roots in music, and the Apple TV is no exception. All of your familiar iPod choices are here, along with the ability to see clips of the top songs and music videos on the iTunes Store. While you're making choices, the cover-flow effect on the left-hand side of the screen glides through your album art, one by one.
Listen to radio on your TV--or podcasts, anyway. While it currently lacks support for streaming Internet radio, the Apple TV lets you enjoy any iTunes-based video or audio podcast. The blue dot next to the top three mean that they haven't yet been listened to.
To avoid the possibility of burn-in, album art and podcast logos are constantly flipped from one side of the screen to the other. A screensaver that shows album art, photos, or the Apple logo is also available.
You can import slide shows and photos from iPhoto (on the Mac) or Photoshop Elements and/or iTunes (on a Windows PC). But photos need to be synced to the Apple TV's hard drive from the primary computer. Because the system "treats" the photos for optimal TV presentation, they can't be streamed.
Apple TV is Apple's first product designed for the living room--though it most certainly won't be the last. No, it won't replace your cable/satellite box, DVD player, or DVR--but iTunes junkies may well find themselves using all of those products a lot less once they get hooked on Apple TV.