Again, of course it does and my 5 ATV's are all connected via Ethernet leaving the Wifi Adapters unused.Again.. A combined Apple TV + Airport would need to be connected to a wired network to act as an 802.11 hotspot. There is nothing stopping you from connecting the existing Apple TV into the wired network and gaining the same benefits.
Your comment of "gaining the same benefits" means you are simply not reading my full post.
I will try one more time and then give up. We are talking about the Wifi connection of the iPhone and iPad, not the Wifi connection of the Apple TV since the Apple TV is connect via Ethernet. Again the Apple TV would be using the Ethernet Connection. Therefore, the iPhone or iPad can connect "directly" to the Apple TV (using Wifi) without having to connect to the house wifi router in the other room.
Regarding this new device costing $250 when the ATV is $99 and the Express is $99. That makes no sense. Even if you combined the two boxes into 1 box it should not cost more then $198. I happen to agree with others here that the Wifi Adapter in the ATV could be used for the hot spot (similar to the iPhone Wifi being used as a hotspot while connect over 4G) without raising the cost of the Apple TV hardware. So we are still talking about a $99 Apple TV. Again, the cost of the iPhone did not double in price when they started to allow it to be used as a hot spot.
Regarding your comment about simply adding another router next to the Apple TV. True, that would give a similar performance benefit, but then you are adding a second box with additional cost and headaches which is simply not necessary. This is similar to people caring a second box with them because they do not want to use their iPhone as a hot spot. When the iPhone has a unused wifi adapter built in.
Lastly, the purpose is to provide a direct connection from your iPhone or iPad to your Apple TV over WiFi without the need for a separate AP which is most likely in another part of the house.
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Exactly.The Airport Extreme is a very poor example. First off, it's always been bigger than the Express. It's designed for longer range! Plus due to Apple's decision to share its casing with Time Capsule, the current Airport Extreme actually has a large cavity in the middle to fit a hard drive.
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This is simply not true. You do realize that the iPhone is very small. But the Wifi Chipset in it supports exactly what we are talking about. It can be used as a client only or as a hot spot while using the LTE Adapter for the Internet Connection. Like the other person said, the Extreme is a bad example. Remember, the ATV is in the same room without any walls to block the signal, normally within 10 feet.WiFi routers require different chipsets and unique antennae components, not present in current Apple TV. The combined device would have to significantly larger, at least double of its current size. I am not even talking about 802.11ac, which currently requries significant larger components (just look at the size of Airport Extreme).