Smells like BS speculation.
16GB of flash is a huge step backwards. That's what, three HD movies? Good luck streaming 1080p, even over 802.11n.
There's just no reason for flash and maximizing portability in a device that's hooked to your TV.
I agree. I've got two Apple TVs right now and have been using the platform since (and only BECAUSE) they upgraded the hard drive to 160gb. We have two because my wife won't allow me to put a TV in our baby's nursery. Here's my take:
(1) Streaming sucks! - I get errors and blips every now and again. Sometimes streamed movies won't play on my bedroom ATV2 for whatever reason. Even an occasional hickup is a pain in the ass when you're trying to watch a movie. I've had my wallet out for months waiting for an ATV with a bigger internal hard drive. They better not mess this one up!
(2) If they REDUCE the number of ports, then what's the point? Currently my living room ATV1 is connected via component video because I ran out of HDMI ports on my HDTV (the other devices output 1080p video so they get preference). Get rid of the port flexibility and you piss people like me off!
(3) It better still include a wired ethernet port! Wireless is spotty, even with 802.11n. This is movies, not the internet. My ATV2 is wireless and every ounce of degradation in bandwidth is apparent when you want to rent an HD movie for the evening.
(4) They better include the ability to connect to a local hard drive. Right now my ATV1 literally shares a shelf under the HDTV with a 2 Terabyte RAID hard drive who's exclusive purpose is to house my iTunes library. How stupid is it that I have to keep my MacBook Pro laptop turned on in the den and sync files back downstairs over yards of wire just to access movies stored in my library drive but not on the Apple TV sitting right next to it? Get a clue apple, add external drive support!
(5) A $99 price point target is idiotic! My Apple TVs are the centerpiece of an over $10,000 home entertainment network. The fiber-optic audio cable that connects my ATV1 to my receiver cost more than $99! The iPod remote cost twice as much. The surge protector (really a line conditioner) that connects my living room system to the wall cost
four times as much! The Apple TV is already the cheapest component of the system, and it's the most important part. Those of you who say "yea dude, once it drops below $100..." are crazy! If Apple wants to build a $99 device for kids, great! I for one would prefer a $499 device that does more.