Expectations -v- Reality
I received my Apple TV last Friday and have to say that I am extremely pleased with it.
First of all, I think too many people had their own expectations and hopes that are unrealistic in the context of what this product was intended to do. This product's purpose in life is to take your iTunes (read iTMS) content and make it easily available on your TV.
Let me say, first of all, that I don't have access to Cable or TV at my house. I have a 1Mb/sec DSL line and that's it. Therefore, I have a "Wall-O-DVD's" for entertainment (which, even with Delicious Library, is impossible to keep organized). I purchased a 60Gb video iPod when it first came out and have been using that to watch downloaded (from iTMS, mostly) TV shows, podcasts and movies on my TV. I've also started ripping my DVD collection to my home server in multi-pass H.264, 640x480 for easy management.
Watching TV from the iPod worked, but was a pain in the ass because I have to go across the room to select the next show and always having to sync it to get new content on it (i.e. podcasts) was bothersome.
All this is to say that, for me, Apple's intended audience, the Apple TV is everything I was hoping for, and more.
- I was concerned about the hard drive size until I discovered just how well I could stream HD movies over my 802.11g network.
- I was concerned about its ability to work with my old (circa 2001) wide-screen, "HD-capable" TV until I found out that it could "cycle through" an amazing number of resolutions and formats and found one my TV liked.
- I was concerned about giving up video quality over playing native DVDs on my TV until I streamed a movie from iTunes that I'd ripped and it looked *better* than watching the same DVD from my DVD player connected through the non-component interface (yes, I have older equipment).
When I do Bittorrent content (hey, if it's available on iTMS I buy it. If not, why not. Your loss. Make your content available on iTunes - and every other legit store - I choose iTunes. /rant) I convert it to H.264 for storage so the "DivX/codenc" issues everyone complains about aren't much of an issue for me. Besides, a vast majority of my content I either have on DVD already or I buy from iTMS.
I'm not one of the few people who buy Blue-Ray DVD's (how many titles are even available for it?) and I can't imagine the drive space needed to store it anyway. As it is, I've had to upgrade my media server to a TB of drive space (which just brought home the point that I now have no way to adequately back it up

)
I'm not a prolific pirate who has a huge collection of videos in non-mp4, non-h.264 format. I understand that there are many out there who are, but frankly, you aren't Apple's target audience. For good or bad, Apple wants you to buy content from them or rip your own from legally purchased sources. This seems reasonable to me. Besides, I have a feeling more BT content will start becoming available in H.264 format soon - especially if Apple includes hardware-encoding in their future products
I also recognize the fact that I'm an early adopter and that this is a first-revision product. I'm excited by the fact that many of the short-comings I see posted can be taken care of with a software update. I suspect, but cannot prove (and am bound by NDA to not speculate too freely) that there might be an update coming along when Leopard ships.
I am also encouraged by the fact that Apple seems to have gone out of their way to make this device eminently "hackable". I don't think the fact that the username/password for it being "frontrow/frontrow" is a coincidence and I am happy to see the "useless" USB port included as well as optical audio out.
I also think that Apple's pricing the product at such a point where they are actually making a profit off it is significant. They have no compelling reason to stop people from hacking/modding/adding-to it. Like the iPod, they'd prefer if you got all your content from iTMS, but make money off you either way. I think their attitude will be much the same with this. When some enterprising person gets Linux running on it and the geek community starts buying tons of these "cheep, small, quiet" PCs, Apple will laugh all the way to the bank.
Meanwhile, people like me and my parents (Apple's target audience) will have a small, quiet, elegant, dependable way to accomplish what we want: conveniently watching our iTunes content from the comfort of our living-rooms.
I'd rate it a solid "A-" at least, if not an "A". A software upgrade is all it would need to get an unreserved "A" from me.