In January, Apple CEO Steve Jobs announced that his company would soon dramatically overhaul the software behind its Apple TV set-top box, while keeping the hardware identical to that which shipped a year earlier. This massive new update, alternatively referred to as Apple TV 2.0 and Apple TV "Take 2," adds new features like direct rentals and purchases from the iTunes Store, freeing consumers from having to make these transactions from their PC and then copy the files over to the Apple TV. What it doesn't change is some of the original Apple TV's other weaknesses: There's no DVR functionality built into the device or into Apple's Macs, so Apple TV owners can only purchase TV shows from, well, Apple. The question here is whether this update is significant enough to raise my score for the device above the 3 out of 5 stars I awarded the original product last year.

The answer to that question, as it turns out, is yes: One year and one major update later, the Apple TV is now a far more viable digital media hub than the unit Apple first shipped. It's not perfect--what is?--but it is significantly better. I use my Apple TV pretty regularly and am impressed with the way it makes even sub-standard videos look wonderful on our 1080p HDTV. With the 2.0 update, Apple has raised the bar enough to warrant another look at this product. Sure, it's still flawed, and it's still blatantly iTunes-centric. But if you ignored the Apple TV last year, it's time to take another look.

What's new?

So what's new in Apple TV Take 2? A lot, actually.

User interface, take two

The Media Center-inspired user interface from the original version has been replaced with a fresh new two-column UI that, while a bid odd looking at first, is actually quite logical. (In fact, it's pretty clear a two-column version of the one-column UI that Apple has been using on its iPods for some time.) In the left column, you see the top level menu items, while the right column displays secondary menu items, which change according to what's selected on the left. The hierarchy is exactly that simple--two levels deep--so you never actually scroll from left to right (or dive deeper into a menu hierarchy), as you do on an iPod. This simplicity is a plus, given the Apple TV's use in the living room with Apple's (overly) simplistic remote control.

The top-most (left) menu has the following choices: Movies, TV Shows, Music, You Tube, Podcasts, Photos, and Settings. It is, in other words, identical to the top-level menu in the previous revision of the Apple TV software (which added, among other thing, support for YouTube).

As noted previously, the right-most menu changes according to which top-most menu item is selected. For example, when Movies is selected on the left, you'll see Trailers, Rented Movies, Top Movies, Genres, All HD, Search, and My Movies. All but the bottommost choice there concern Apple's online store, which we look at in more detail below. But it's important to understand that Apple has made two very major changes in focus with this product, which can be seen from this menu. First, it is focusing foremost on content it can sell or rent to you. And of the content it can provide, it is putting the biggest emphasis on movies.

This makes sense to me. By far, the most common use I've had for the Apple TV over the past year is movie watching, and this version includes new functionality that makes this activity even better. We can quibble over the mercenary nature of Apple's focus on commercial content (links like My Movies and My Music are almost always at the bottom of the second menu) but it's all good. I get where they're coming from.

Links that jump beyond the top two tiers of the menu will launch one of two screen types, typically: A list like those common in previous versions of Apple TV or, in the case of movie lists and other displays, a more graphical album art oriented grid. The search related screens offer a third UI, in which you can painfully "type" in searches using onscreen letters and other characters.

iTunes Store integration

While the new UI is nice, the big change with version 2.0 is, of course, direct integration with the iTunes Store: You can now browse and purchase (and, in the case of movies, rent) movies, TV shows, music, podcasts, and other content directly from Apple TV. The focus, as mentioned previously, is clearly on movies, and that makes sense, given that most Apple TV owners will place their device in the living room and connect it to an HDTV.

The Apple TV rental and purchase experience is excellent. A small handful of movies--about 75 at launch--are also available in HD format, providing a tiered pricing model ($3.99 for standard definition rentals and $4.99 for HD) and higher quality choices for those who are interested. A very few movies are closed captioned (including some HD titles).

Non-HD content that you purchase from the iTunes Store on the Apple TV, like TV shows, are synced automatically back to the PC, which is a nice touch. And after a movie or TV show has begun downloading for a few minutes, you can begin watching. This appears to work very well. My only quibble is that the Apple TV can only do one thing at a time: It can download the movie you're currently watching, yes, but it won't start downloading a second movie or TV show until you stop watching the current one.

Seamless interaction with iTunes

With the original Apple TV, the way the device would interact with your PCs was somewhat convoluted. You could establish a syncing relationship with a single PC; when connected to that PC, the Apple TV could only display that content that was synced, or copied, from the PC to the device. To view other content that might be contained on the syncing PC, or to view content on other PCs (or Macs), you had to laboriously navigate through the menu system, disconnect from the sync PC, and choose another source.

Now, the relationship between the syncing PC and the Apple TV is much more seamless. Yes, you can sync as before. But as long as iTunes is running on the synced PC, you can always access all of the content that's in iTunes, from the Apple TV. This is a huge improvement and it makes the Apple TV much more a front-end to your PC-based content. (And it makes it behave a lot more like the Xbox 360.)

Support for online photo services

Apple TV Take 2 adds limited support for online photo services. I say "limited" because only one of the two choices, Flickr, will be of any interest to PC users, and because even that support is limited in ways I'll describe in a moment. Apple TV also supports .Mac photo Web galleries, but that will mostly be of interest to Mac users, or those who know Mac users that share photos with this feature. (I believe there are 7 worldwide at this writing.)

To display photos from a Flickr account, simply select Flickr from the menu and then type in the name of the account. Unfortunately, this support for Flickr extends only to public sets and collections: So if you have a Flickr account and store photos in a private set, you can't log in and get to them from the Apple TV. This seems like an odd exclusion.

Support for better video and audio

Whereas the Apple TV previously supported Enhanced Definition, 720p, and 1080i displays, it now adds support for true 1080p, or "true HD." However, this is a bit of a misnomer. You can't actually rent 1080p content from iTunes Store. Instead, the Apple TV can apparently output to 1080p, though the content you're seeing is, at best, about 720p, and pretty medium quality bit rate 720p at that. I couldn't really see a difference between 720p, 1080i, and 1080p on my set, and the video quality was generally very good to excellent.

On the audio front, Apple TV now supports Dolby Digital 5.1 via Apple's Air Tunes feature, which lets you target the Apple TV from your PC. (It's configured from Preferences, Advanced, General.) Put more simply: You can stream music and the audio from other content from your PC-based copy of iTunes to the 5.1 stereo system connected to your Apple TV, essentially using your Apple TV as the connection point for remote speakers. Not too shabby.

Finally, I should reiterate that Apple TV, like the iTunes Store, the new iPods, and the iPhone, supports movies encoded with closed captioning. However, there are only a small handful of CC-enabled movies on the iTunes Store right now (and no TV shows at all, to my knowledge). And the closed captioning feature is global and must be set from the Settings menu: You can't just toggle it on and off from the playback screen. It's a first step.

What's missing?

OK, I've already noted that the Apple TV doesn't include any sort of DVR functionality, but it's lacking in other ways. As an Apple product that is locked in the Apple ecosystem, the Apple TV does not work with any non-Apple-supported audio and video formats. It won't play back WMA video, for example, or DiVX or XviD either. (These three formats are all supported by the current generation Windows Media Extenders, by the way.) And Apple won't convert them for you, though iTunes will convert non-protected WMA files to MP3 or AAC if you'd like.

I find the lack of back-sync with HD content to be odd. My guess is that Apple will eventually allow customers to both purchase and rent HD content on PCs as well as the Apple TV, and that HD will, over time, replace the standard definition content that is prevalent today. I'd like to see Apple take a leadership position here: Their support of HD content could effectively kill demand for disc-based HD formats like Blu-Ray and HD DVD.

And while this may seem like a small issue, Apple would be wise to create a DVD-enabled Apple TV version. Right now, consumers who purchase this device are essentially just adding it to what is likely a pretty complicated home theater set up. By including a DVD player (come on, it's a $19 part) Apple could inspire customers to replace an existing box in their living room--the DVD player--with a device that does so much more. Again, modern Media Extenders come in two versions, one of which has an integrated DVD player. It's a good idea. And yes, I know Apple will never do it.

At first, I was surprised that Apple didn't bump the hard drive capacities on the device--it still sells 40 GB and 160 GB versions, just like last year--but the new seamless integration with PC-based installs of iTunes renders the local storage a bit less important. Indeed, you can pretty much just use it as a temporary holding place for rented content.

Finally, Apple's remote is too simple and does not scale well to the needs of entering text onscreen. Most Media Center remotes are far more functional and make it much easier to enter text.

Final thoughts

Apple's new version of Apple TV is much more desirable than the original and does much to cement the company's lead with digital music, TV shows, and movies. Those who have bet on Apple, as I have, will be excited to learn that their investment has really paid off: The Apple TV is a great way to rent and purchase movies, though the selection of HD content is limited, both in selection, and to renting only. Apple offers a great library of movies, TV shows, podcasts, music, and other content, and it's now all available from the comfort of your couch. For now at least, the Apple TV is the digital media set top box to beat.                                         

--Paul Thurrott
February 14, 2008