Apple TV: New and (Partly) Improved

You can download content more easilybut there still is far too little of it

Apple (AAPL) is more reluctant than most companies to admit its mistakes. One of the rare exceptions has been Apple TV, released last spring. Critics were skeptical, consumers indifferent—and, amazingly, Apple took it all to heart. It has released a new, free version of Apple TV software that overcomes many glaring deficiencies.

The original product, a nondescript square box that sat next to your computer, excelled at just one thing: displaying on a big-screen TV the movies and video that you downloaded from the Net. My review (BusinessWeek, 4/2/07) faulted Apple for failing to secure the rights to a large supply of movie content so that Apple TV users might have something to watch. I also complained that consumers were obliged to connect to a Mac or PC to download the content—an unnecessary step in an age when simple circuit cards can perform that feat.

The new software makes two big changes in how you use Apple TV, which starts at $299. First, you can browse the iTunes Store from your television screen for movies, TV shows, and music. In the original version, you had to shop on a computer, then sync the content with your Apple TV box. Second, you can rent movies instead of buying them. While Apple might be right that customers want to own their music, there's no question most people would rather spend $3 to $5 to rent a movie that they may watch only once rather than spending four times as much to own it. The Apple TV overhaul also adds high-definition movies and the ability to display photos from Flickr or .Mac accounts as well as content stored on your computer.

I still wouldn't call the Apple TV a compelling addition to a home-video system, but these changes definitely make the product more useful and desirable than the original. For one thing, the process of renting movies is simpler than ever. Once you have established an iTunes Store account from a computer, you just enter your user name and password via an onscreen keyboard.

Apple Needs To Step It Up

Rentals can be played during any 24-hour period within 30 days of downloading and cost $3.99 for new titles and $2.99 for older movies. HD versions, where available, cost $1 more. TV shows are offered for purchase only, at $1.99 per episode. You can choose a movie either by browsing through categories or by searching. For now, browsing is easy—for the wrong reason. Fewer than 500 movies are listed, with just 91 of them in HD. Apple has deals with all of the major studios, but so far Hollywood has been stingy in making content available. By contrast, Vudu, a movies-only set-top box, claims 5,000 offerings, while NetFlix's (NFLX) download service offers 7,000.

The lack of HD movies isn't that big a deal. While the HD titles look better than the standard-definition versions, the difference isn't dramatic. Technically, HD is a format that provides at least 720 horizontal lines of resolution, compared with 480 lines for standard def. But squeezing HD through relatively narrow broadband pipes—cable or DSL—requires massive compression that can seriously degrade image quality, even if the original picture was very high-res. I was impressed by the DVD-like quality of both HD and standard movies, though it's not what you'd get with a Blu-ray disk. With my relatively fast Comcast Internet connection, I was able to start watching an HD movie within a couple of minutes of beginning a download.

Still, Apple must do better. Internet access is limited to Flickr and .Mac photos, YouTube (GOOG), and the iTunes Store. But what about the TV networks' program offerings? And the movie selections lag far behind other services, including the Amazon (AMZN) Unbox service on the TiVo (TIVO) HD, which can do everything Apple TV can plus a lot more. The recommendations system could stand some work, too: The store made the peculiar suggestion that people who liked Doctor Zhivago might also enjoy Jackass: The Movie.

Apple TV remains a work in progress and will get better over time. But for now, most people will likely find it to be too limited.

"Apple (AAPL) TV: New and (Partly) Improved" (Tech & You, Mar. 17) gave an incorrect price for Apple TV: It starts at $229, not $299.

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