So, here’s a little story: I ordered an Apple TV the moment the Apple store came back on-line after Steve Jobs’ MacWorld keynote back in January. I was pumped. Here was the media access device for my home network and big screen TV that I had been looking for for years. And it would be shipping in February. Cool.

Then February came and I got a nice little email from Apple saying that they really needed a couple more weeks to make things perfect. So it wouldn’t be shipping until March. Well, OK. I can understand that.

Then the middle of March came and went and no ship notice from Apple. Getting a little nervous, I went back thru the specs that Apple had published on the device, as well as several tech blogs that had been speculating and previewing it. And finally I decided that it just might not do everything I really wanted it to do. So, three days before it finally shipped, I cancelled my order.

Fast forward about three weeks to today. As part of our monthly Final Cut Pro User’s Group meeting, I’ve been called upon to review the device and demonstrate it for the group. So a buddy of mine drops his brand new AppleTV off to me last night and I spent a few hours playing with it. Here’s my review.

It’s pretty cool. But, it’s version 1.0.

OK, first, what is it? The easiest way to explain what AppleTV is is this: it’s an iPod for your TV. It behaves almost exactly like an iPod with respect to it’s interaction with and reliance upon iTunes. It shows up in iTunes as a device, just like an iPod. The preference panels are almost identical, allowing you to select what to sync with it, and it has an internal hard drive that caches the synced content, just like an iPod. The only real difference is it can stream from other iTunes machines on the network.

Even the unboxing was remarkably similar to the iPod experience. The package is the same slipcase design that the new iPods ship in, an unfolding container in a sleeve. The packaging is distinctively Apple. Clean, elegant, efficient, inviting. “Designed by Apple, Inc. in California.” The whole schtick. In the box is the unit itself (a little lighter than I expected), a power cord, the “gum package” Apple remote, and a sleeve of thin manuals. No fluff. Just what one has come to expect from modern Apple packaging.

After peeling the cellophane wrapping off of the unit and remote, I unplugged the HDMI cable from my HD-DVD player and plugged it into the AppleTV, and then plugged the power cord in. No on/off switch. I flipped my TV to the second HDMI input and the Apple logo appeared on the screen.

Once of the touches that makes Apple products distinctively Apple is the fit and finish of the user experience. AppleTV lives up to that expectation (for the most part, more on that later). Instead of jarring visuals that blink on and off, the screen is very clean and elegant. Transitions from one screen to the next are dissolves. The remote is simple and works just as you’d expect. Holding the up or down button down will scroll quickly thru lists, picking up speed as it goes. But I never seemed to overshoot what I was aiming for. They really seemed to spend some time and effort timing the interface and navigation. It felt very natural.

Setup was a breeze. I intentionally noted the time so I could see how long it would take to get things going. I didn’t need to. It took 3 minutes. After showing the Apple logo for a few seconds, the screen faded and then showed me a list of the wireless networks that the unit could find (6 in my case). I selected my network, and the unit let me know that the network was a closed wireless network, and gave me a virtual keyboard on the screen where I could “type” the password (upper- and lowercase, numbers and symbols). After a couple of tries at remembering my password it immediately attached to the network and found the machines I had on that had iTunes running.

The next screen showed a 5 digit code. Looking at my notebook’s iTunes screen, I noticed that the AppleTV had appeared in my device list on the left with a small message “click to setup”. Clicking on it AppleTV item in the list, I was immediately asked for the 5 digit code from the screen. After entering the code, the system informed me that setup was complete and ran the AppleTV intro video (very slick, reminded me of the TiVo setup complete movie).

My iTunes began to sync with the AppleTV, moving content from my library to the unit. As the content flowed into the unit, it started showing up as I navigated around the menus. Video content first, then music. Photo syncing was disabled by default, but after checking the box on the Photos tab, iTunes began to sync pictures down to the AppleTV.

Some things I noticed while playing around for a couple of hours:

• As I said above navigation is very smooth and intuitive. Anyone could navigate this system and find what they’re looking for. There is room for improvement, but if you have your iTunes library organized well, that will translate directly down to the AppleTV, just like it does to the iPod.
• The “screen saver” features are very cool. When playing music, the album artwork flips sides every 20 seconds or so. After a couple of minutes (configurable), the true screen saver kicks in, showing a collection of photos floating in space, doing a 360-degree fly-around every 30 seconds or so. Very, very nice effect. However, it’s not random. The selection of the pictures can be random, but the fly-by pattern is very predictable and the same every time. That’s a little bit of fit and finish that could be better.
• The remote is the same that came with my MacBook Pro, and it was annoying that every time I hit the menu button to control the unit, Front Row would come up on my MBP. I don’t know of a way to dedicate a remote to a particular unit. I know there must be a way, but it’s not obvious. That could be better.
• When selecting a movie or video that you weren’t finished with last time, the system brings up the current frame from where you left off, blurred, with an overlay that asks if you want to resume or start from the beginning. Very nice touch.
• When playing video, syncing stops. It seems to work fine as long as music is being played… syncing continues in the background. But when you start a video, any sync in progress is cancelled. Within seconds of stopping the video, the sync picks back up and continues. Interesting, and nice way to make it feel seemless. Makes me think that decoding and playing out video is rather taxing on the unit, or that Apple is being conservative about bandwidth and cancels a sync just in case you’re streaming the video over the air. I haven’t tried, but I wonder if the same holds true when the unit is wired into the network instead of using 802.11n.

After playing with the unit for a couple of hours, I’m very tempted to get one to stay. However, there are a few nagging details and deficiencies that I’ve found, confirming my suspicion that caused me to cancel my order before they shipped.

• The unit doesn’t play VOB files (raw VIDEO_TS folders, or rips of DVDs). My goal is to rip my DVD collection and have it available at any time at my media center without having to go hunt for a disk. That includes, especially, the director’s commentary and subtitles. Here’s the deal: I’ve ripped to H.264 about 30 of my DVDs, mainly to have available for trips on the iPod or on the computer to occasionally have running in the background while working on other things. This works great, and those ripped MP4 files play fine on the Apple TV (see the point on that below). However, currently ripping to MP4 doesn’t support alternate audio, selectable subtitles, or chapter stops. Those are biggies in my mind. The easiest way that AppleTV could deal with that in my opinion is allowing you to point it at a network share and have it recognize VIDEO_TS folders within. This could be fixed with a software upgrade. We’ll see.
• Resolution. The resolution setting menu indicates the unit can output 720p, 1080i, 546p, 480p, and 720p50 or 1080i50 (for the European crowd, I guess). I didn’t notice any appreciable difference between 1980×1080i and 1280×720p. The menus are extremely crisp, but when playing video, it was noticeably soft. This was especially true of a 640×480 DVD rip (to be somewhat expected), but also true of a true 720p .MOV that I moved over to the unit. By contrast, by Toshiba HD-A1 HD-DVD player scales up SD DVDs exceptionally well. The Incredibles, for example, looks stunning on my Samsung 67″ in 1080i. I’m a little concerned that the processor in the AppleTV is a little underpowered for HD content at higher bit-rates.
• Photo viewing is a little jerky. You have the option to select different effects and apply the “Ken Burns” move on photos when viewing a slideshow, but the starts and stops aren’t near as fluid as they are on the built-in screen saver in OS X. I was thinking this unit could double as a picture frame (like the one I built), but it’s not near as pleasing to watch. Looks like Apple didn’t quite finish this feature out. Also, there’s no apparent way to scroll thru pictures, only play them in a slideshow fashion.
• Another problem with photos is during the “screen saver”, the photos seem to be a little squished. I don’t think the software is respecting the aspect ratio of the images… might just be me. I need to throw a calibration image in a see if it really is warped.
• Podcasts. Podcasting is a perfect delivery method and content source for this unit, especially as more and more video podcasts become available. However, because of it’s direct tie to an iTunes library running on another computer, there’s no way to aggregate podcast content on this box directly. There should be a way to subscribe the AppleTV itself to RSS feeds (it is on the network, after all), and let the content flow directly down to the box. I would definitely subscribe to more video podcasts (and watch them eventually), if they were on the box directly, but I don’t necessarily want them taking up space on my main computer.
• Photocasts. Just like RSS with enclosures (podcasts), Apple missed a huge opportunity to tie the Photocasting idea from iPhoto into this unit. Image this: I purchase an AppleTV for my kids grandparents, and subscribe them to a Photocast of the latest pictures of the kiddos. Now they have a photoframe of their grandkids continuously updated, right there on the big screen in the living room. Huge deal.
• Purchases. There’s no way to purchase directly from this box. There’s a real missed opportunity for Apple here, in my opinion. I should be able to browse the iTunes store for content, preview and purchase, all from my couch. As it stands, I can preview minimally (the top 10 videos on the store), but if I want to purchase one I have to go to the other room, log in, find the item again, purchase it, let it download, and sync to watch it on my TV. Not the experience that sells this box, I’m afraid. Once again, I think this could be remedied with a software upgrade, but I think these things would be flying off the shelf a lot faster if the whole experience was seemless.
• Internet Streaming. On top of not being able to make purchases on the unit, you can’t browse and stream video from popular sharing sites like YouTube either. I’m not sure this is completely a downside, as the average consumer is probably not going to want to try to search for that type of content without a keyboard, nor watch poorly transcoded flash video on a 60″+ screen. But the fact remains that Apple TV is a network-connected device that doesn’t take advantage of the Internet like it probably should.
• The trailers don’t seem to be completely up to speed with Apple’s trailer site. Plus, there’s no way to resort the list to see the newest trailers up top, only alphabetical. The system should alert me when there are trailers I haven’t seen, show me which ones they are, and let me find things either by release date, title, genre, etc. That would be much more useful and user friendly.
• The hard drive is entire too small for a unit of this type. With movies from the iTunes store weighing in at 1.5GB or so and TV shows at 500-600MB, this unit won’t hold much. Even my TiVo has a 250GB drive in it. Apple put a USB2 on the unit, but designated it for “service and diagnostics” only. They should’ve come out of the chute with the ability to buy an off-the-shelf external USB drive and plug it in for additional storage. And as I said above, I should be able to point the unit at a network share with content as well. I know it can stream from multiple iTunes libraries, but switching between streaming computers is a little clumsy, and the setup time to display library information is annoyingly long. I should be able to point the unit at multiple libraries or shares, have it aggregate and cache the content meta-data, and present it in a unified interface. I shouldn’t have to care that video A is coming off of the computer in my office while video B is coming off the local drive. In fact, when I start playing video A from the remote computer and get 5-10 minutes into it non-stop, the AppleTV should go ahead and copy the remainder to the local drive and play it from there. That’s what the internal drive should be used for, a cache of recent or most accessed content.

Overall, the AppleTV is a very nice unit and very close to the right price point. I think it would probably sell like gangbusters in its present form at $199, but the $299 could easily be justified by the masses if a few of the above criticisms were addressed. While I’m probably going to go ahead with plan B, putting a Mac Mini in instead, I’ll be very interested to see what Apple TV version 2.0 looks like.

And I bet we see it before Christmas.