The New Apple TV: Almost There

I ,ve been playing with the new Apple (Nasdaq: AAPL) TV, and as an old Apple TV owner, I've got mixed feelings about the sexy new black box.

The new AppleTV includes ports for power, HDMI out, USB, optical audio and Ethernet. It can also use WiFi.

On the whole, it's an excellent new product with new features, a new operating system, as well as the foundation to let it be upgraded in November to offer the amazing ability to stream content from your iPhone, iPad or iPod touch directly to your big-screen TV.

And yet, there are a couple of pesky downsides.

First, the Fantastic

As always, the Apple TV looks great -- lithe and black, it's so small it can fit pretty much anywhere around your HDTV. In fact, if you want to slip it into a tight spot, you'll have more trouble with the stiff end of an HDMI cable than you will with the unit itself. The old Apple TV was large enough to be noticed, and guests would ask what it was, turning me into an instant Apple TV salesperson. The new one is downright unobtrusive.

The functionality, however, remains sweet. The interface is slightly different than the older generation, and it reflects a new key reality in our computing landscape: streaming content. There's no spinning hard-disk drive in the new Apple TV, and that means you access content only by streaming it from either Apple's servers in the sky; from affiliated servers in the sky like YouTube, Flickr, or Netflix (Nasdaq: NFLX); or from your own PC or Mac.

You need a broadband Internet connection, of course, which you connect to most easily via WiFi (but there is an Ethernet port). You also need an iTunes Store account, which lets you rent movies and TV shows. Through a feature called "Home Sharing," your iTunes account also provides the link between the content stored in iTunes on your Mac or PC with the new Apple TV.

At first glance, once I connected to my MacBook, I couldn't figure out where my movies were -- they were under the Computers menu item rather than integrated under the Movies menu item. It was confusing at first, but it makes sense upon inspection: In the new streaming device model, your Apple TV will be able to stream content from multiple sources, and Computers will help you identify where the content is coming from. And as I mentioned, when Apple delivers an AirPlay upgrade in November, you'll be able to stream content from a mobile Apple device.

With some selected network television partners, Apple TV owners can now rent 720p HD TV shows for just 99 US cents. It you're the kind of person who is at all willing to pay for content, this is a sweet deal, especially for hour-long dramas that skip the commercials and give you 45 minutes of show time. Ninety-nine cents for 45 minutes of entertainment without interruption? That's generally a recipe I like. You can also rent movies, usually on the same day that you can rent them elsewhere or buy the DVD. "Iron Man 2," however, is a recent exception to the rule. For some reason -- likely driven by the studio that holds the distribution rights -- customers using iTunes or Apple TV could not immediately rent the movie until some days after it was first available for sale.