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How Apple Is Missing a Billion-Dollar Opportunity

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The Apple TV keeps the title of the company's most shoddy, underpowered device.

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In February 2008, Apple (AAPL) released a long-awaited update to its much-maligned Apple TV. It introduced HD rentals, expanded storage, and offered AirTunes support. And now, a short 20 months later, Apple has returned to its most-ignored product for a little upgraded tinkering, and in doing so, it's solidified the widespread belief that it just doesn't care about the Apple TV.

First, a little background.

Six months ago, I was in the market for a digital media center to work with my HDTV. As far as features went, I wasn't focused on a Blu-ray drive (I wanted to rip my DVD collection to a hard drive) or DVR capabilities (I download or stream the majority of programs I've missed). I was merely concerned with HD, file compatibility, and network-attached storage to the tune of several terabytes.

During my pre-purchase research, I saw high marks for Popcorn Hour by Syabas Technology and Western Digital's (WDC) WD TV, but I did have my eye on Apple TV. Granted, the storage capacity was minuscule -- a laughable 40GB for the low-end version -- and it lacked the ability for network expansion. But I came upon several articles (see here and here) on how to "tweak" Apple TV's software to allow a USB connection to external drives, FTP transfer, and support for almost any file format you can throw at it. According to every source I could find, installing a third-party media program called Boxee would be quick and easy, and it was actually recommended.

I thought, why not? I've voided warranties before, and I'd be ecstatic to get rid of my ancient Panasonic (PC) DVD/DVR combo.

Although the patch and installation were incredibly painless, the talented folks behind Boxee couldn't make the Apple TV a quality device or mask my regret for making an unwise purchase. With an underpowered processor that barely handles HD, a purposely disabled USB port, and a surface temperature you can fry an egg on even in standby mode, Apple should be embarrassed.

And yet, yesterday Apple released an update to the Apple TV software, toying with owners as if they actually cared about the product.

The underwhelming 3.0 upgrade rearranges the menu screen interface -- a change that Gizmodo referred to as "fugly" and "uggghsome" -- and adds features like iTunes Extras, iTunes LP, and Genius Mixes. Of course, limited file compatibility, choppy HD, and an absence of Netflix (NFLX) and Pandora remains unchanged.

It's still a mystery as to why Steve Jobs and company continually ignore Apple TV, referring to it as "a hobby." Being one of the biggest names in tech and unstoppable in the field of portable media players, Apple is in the position to become the leading name in the future of media centers. If it could do half of what the iPhone did for the cell phone market, we'd all be ditching our DVD players in favor of terabytes of video files on a heavy-duty Apple TV. Instead, dozens of cheaper and more capable devices trounce Apple's abomination in benchmarks and performance. Even Microsoft's (MSFT) Xbox 360 loaded with XBMC -- formerly known as Xbox Media Center -- allows for better video management.

However, since none of these devices carry the coveted Apple brand, they're unable to sway the public from relying on physical media to watch their shows and movies. Jobs' hesitance to include Blu-ray drives on Apple laptops seems like he's open to ditching physical media, but there's yet to be a follow-through. The company only needs to put their spin on existing technology -- as well as actually advertise the thing -- and they've found a brand new billion-dollar seller.

As for now, I don't recommend the 3.0 upgrade. It breaks compatibility with Boxee and ruins the only thing that makes Apple TV remotely usable.
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