I'm pretty far from being a Luddite, but I've never understood the point of the Apple TV. Even after its update to the newest version, I still don't get why this product exists. Erica posted the reasons she and other members of the TUAW team feel the Apple TV is every bit as revolutionary as any other Apple product, but I disagree. There are many things keeping the Apple TV from being an appealing product, not only for me, but for millions of other potential customers, too. I've outlined five of those reasons below.
1. Apple TV is a half-trick pony. I'd say it's a one-trick pony, but that's what the old Apple TV was. With its new rental-only model, the Apple TV is now little more than an AirPort Express with video streaming. For many users, that may be exactly what they've been looking for. If you've got an iMac on the far side of the house from the big-screen HDTV in your living room, Apple TV may be a good solution for you. If you've got a MacBook, though, a US$99 Apple TV doesn't do anything that a $5 VGA cable won't do just as well. Sure, there's the tantalizing possibility that Apple TV may run apps someday, but it's only a possibility. I don't know about you, but I base my purchasing decisions on what a product can do today, out of the box.
Click "read more" to view the other four reasons I think Apple TV is still just a hobby.
2. Apple TV has limited international appeal. Here's the list of countries that support movie rentals: United States, UK, Canada, Australia, New Zealand, France, Germany, and Ireland. Here's the list of countries where Netflix streaming works: US and Canada. Here's the list of countries where you can rent TV shows: United States.
If you're outside of that relative handful of countries, there's pretty much no point in buying an Apple TV. That includes most of Europe, all of Latin America, and all of Africa and Asia. Millions upon millions of potential customers live in those countries, but since you can't rent movies or TV shows there, an Apple TV is all but worthless for them.
3. Apple TV has limited codec support. The list of codecs Apple TV supports is identical to what the iPad, iPhone, and iPod touch supports, which pretty much boils down to H.264, MPEG-4, and Motion JPEG. Forget about AVI, MKV, or any of dozens of other video formats -- unless you jailbreak. You can also forget about 1080p playback, because Apple TV is capped at 720p. Granted, Apple TV will play absolutely anything the iTunes Store puts out, but all of the iTunes Store's video files are encumbered with DRM. Stack the Apple TV's lack of a disc drive and limited codec support against something like a PS3, and the Apple TV looks like a piece of junk by comparison. Speaking of which...
4. Apple TV has limited appeal in households with modern gaming systems. My PS3 will play virtually any video file I throw at it, and it also plays DVDs, Blu-rays, PlayStation games, PlayStation 2 games, PlayStation 3 games, games downloaded from the PlayStation Online store... the list goes on. My PlayStation 3 also has 60GB of built-in storage compared to the Apple TV's 8GB, and it also accepts external hard drives -- like the 1TB drive that I have plugged into one of its USB ports. I don't own an Xbox 360, but the situation is virtually the same for owners of that system. Apple TV offers almost nothing that these other systems don't, and the percentage of households with HDTVs (remember, the new Apple TV only connects via HDMI) but no PS3, Xbox 360, or Home Theater PC has to be quite small.
5. Apple TV has almost no backing from Big Content. TV networks have been understandably reluctant to give up as much power to Apple's iTunes Store as the big music labels gave Apple in the mid-2000s, and the result is a confusing landscape for customers. Movies can be purchased or rented from almost any studio, but TV show rentals are only available from the small number of networks that have signed on with Apple. The situation is similar to 2005's launch of movie purchases on the iTunes Store, but the difference now is that TV networks' relationships with Apple have soured, mostly because the networks want more money than Apple is willing to give them; Amazon and Google TV both represent alternatives to the iTunes Store that many TV networks may find attractive. The result for any potential Apple TV owners is a fragmented, confusing landscape where there's no easy way to tell whether their favorite shows will be available to rent or not.
Out of all the features that the new Apple TV has, the only one that I've found even remotely appealing is AirPlay. The ability to stream video content to and from my iPhone 4 sounds neat, but personally, I've got other ways to do the same thing with my existing devices. I've got a house full of Apple's devices, but the Apple TV has no place or purpose in my home theater setup. The strong initial sales numbers for Apple TV certainly show that it has greater appeal than the older model, but for now, the device is very clearly still just a hobby.