Apple TV: What happens now?

As Steve Sande has reported, Apple has discontinued the 40 GB Apple TV unit, and dropped the 160 GB unit U.S. $100.00. The large capacity set top box now sells for $229.00, the price that the now-eliminated 40 GB unit used to sell for.

Apple has continuously referred to the Apple TV unit as a 'hobby', perhaps a way to explain less than stellar sales figures. It's way overdue for some kind of update and new features; perhaps an 'all you can eat' rental program similar to the Netflix model.

At the same time, the Apple TV service has had plenty of issues: everything from failures to authenticate users, to (for the last few days) an inability to browse the HD rentals beyond titles starting with the letter 'B.'

Piper Jaffray analyst Gene Munster had recently predicted that Apple would drop the 40 GB unit and lower the price of the remaining 160 GB unit, a prediction that turned out to be spot on. Munster has also predicted Apple would add DVR capabilities to the device.

Now, if only Apple would let that mysterious USB port on the back of the Apple TV allow more storage, and fix the service glitches, a lot of people would celebrate.

Some price adjustments for rentals would also be welcome. It is cheaper to rent Blu-ray titles at Blockbuster overnight then get the same title from Apple. Yes, you have to go get it, but the picture quality is better on the Blu-ray disk.

It's hard to figure out exactly where Apple should go with this device. I don't find the YouTube content compelling on a hi-def screen. Rentals are fine, but severely limited by the MPAA rules that only let me keep the rental for 24 hours. We're starting to see YouTube and Netflix being built into both TV sets and some new DVD/Blu-ray players, which will further diminish the Apple TV value. Hopefully Apple is up to something, or the 'hobby' will remain a half-baked idea that never took off.

Thanks to Jeremy for the the tip.