Understanding how Apple TV operates and enhances your viewing experience is key to unlocking its full potential.

While Apple has long been known for its iconic iPod and other audio gadgets, the television segment seemed to take a backseat, with many assuming Apple was focused on music lovers instead. However, since its debut in 2006, Apple TV gradually faded from the spotlight. Recently, though, it has regained traction as people realize its ability to enhance the HDTV experience in numerous exciting ways.

In the spring of 2007, Apple started shipping the Apple TV, promoting it as a bridge to combine your computer's power with a high-speed Internet connection and the stunning visuals of an HDTV. Specifically, you’ll need a TV with widescreen (16:9) enhanced-definition or high-definition capabilities, as well as HDMI, DVI, or component video input ports.

By connecting to an Ethernet network and creating an iTunes store account, you can control and display photos, stream music, and watch videos on your TV. You don't need a Mac-based computer to make it work, as Apple TV is fully compatible with both PCs and Macs. Furthermore, Apple TV lets you access content beyond your personal iTunes library, including HD-quality movies from major studios, using various Internet services.

After receiving feedback from the initial wave of Apple TV users in early 2008, Apple CEO Steve Jobs stated, "What we learned was that people wanted movies, movies, movies." [source: Block]. Since then, Apple has worked tirelessly to meet the demand for enhanced TV and movie options, a key factor behind the significant increase in unit sales in January 2009, which tripled compared to the previous year [source: Apple Insider].

On the upcoming pages, you'll discover how Apple TV integrates with your entertainment setup and explore how several software updates from Apple (along with some creative user tweaks) have fueled Apple TV's surge in popularity.

Apple TV's Core

The compact, silver casing of Apple TV may not resemble a desktop computer, but its internal components are strikingly similar to those found in a computer. It houses an Intel processor, a 40GB or 160GB hard drive, 256MB of RAM, and supports both wired and wireless Ethernet connectivity. It also includes an NVIDIA GeForce Go 7300 graphics card. To connect the device to your HDTV, it features HDMI and component jacks, along with a USB port primarily for technical service. While you can use Apple TV with an older standard-definition TV that has component jacks, the picture will likely be stretched if the TV doesn't support widescreen input. Although Apple could have included letterbox formatting for standard definition, it chose to focus on widescreen formats, which are expected to dominate the TV industry.

Apple designed the Apple TV for ease of use. Simply connect your TV to the Apple TV, and it will automatically detect your wireless network. You can sync the device with one computer's iTunes library, while still accessing iTunes libraries from up to five other computers in your home. Grab the Apple TV remote, kick back, and you can play music, watch your favorite TV shows, start a movie, or stream content from YouTube, Flickr, or MobileMe.

You don't always need a network or an Internet connection to use Apple TV with your TV, much like you don’t need a computer to enjoy music on your iPod. Simply sync it with your computer's iTunes library, and you can play files stored on the Apple TV's hard drive. The 40GB model holds about 50 hours of video or 9,000 songs, while the 160GB version stores around 200 hours of video or 36,000 songs.

You can also use your Internet connection to explore Apple’s online content. Through the iTunes Store, you can rent a newly released standard definition or HD movie with surround sound and start watching in just minutes. Since HD movies contain more data, they take longer to stream, so a slower Internet connection may result in longer loading times. Apple advises that starting an HD-quality film can take less than 60 seconds on a 6Mbps connection, or up to two hours if your connection speed is around 2Mbps.

You have 30 days to begin watching a rented movie, and once you start, you'll have 24 hours to finish it. New releases are typically more expensive than older films. Additionally, you can purchase music or buy TV shows from the iTunes Store, often available just a day after they air.

Apple TV Software

Apple TV acts like a traffic director for your entertainment setup, ensuring seamless data transfer between devices within the framework of Apple's designed system.

Here’s how the system works: Imagine you’ve just downloaded a new movie to your iTunes library. Your computer with iTunes is upstairs in your home office, while Apple TV is connected to the HDTV in your basement entertainment room. A wireless router allows communication between your office computer and the Apple TV. To start, you use the remote control to navigate through Apple TV's menus on your HDTV and select the movie option.

Your input is sent to Apple TV's module controller software, which is the key application responsible for managing the input/output functions of Apple TV. This software identifies devices as they are added or removed from the Apple TV network. It also recognizes whether you're using a traditional infrared remote or the Remote app on an iPhone or iPod, adjusting the interface accordingly for smaller screens when needed.

Each device in your Apple TV network runs its own software that helps it communicate with the module controller. The controller directs your request to the right component in the network— in this case, your office computer, where the movie is stored in your iTunes library.

Your computer receives the request for the movie and sends the data back to the module controller. This controller then helps display a menu option on your HDTV, allowing you to start the movie. When you select Play, your computer begins streaming the movie through your wireless network to the TV, all guided by the module controller's direction.

In short, the module controller software is the powerhouse behind your Apple TV. It monitors the components connected to your local network, directs all the commands you input, and manages everything displayed in the menus. Additionally, because data is processed through Apple TV's software and processor, Apple has the ability to limit the file formats compatible with the device — a limitation that has frustrated some users, as you'll discover shortly.

Apple TV Compared to Other Media Devices

Apple TV supports a limited selection of video formats. You can watch clips encoded with the MPEG-4 (Moving Picture Experts Group) or H.264 video codecs at maximum resolutions of 720 x 432 pixels and 1280 x 720 pixels, respectively. This means that video from sources like the iTunes store and YouTube is playable, though the latter won’t be in true HD quality. You might notice that Apple TV doesn’t support common formats like .AVI, and later, we’ll discuss how these limitations led many users to seek alternative solutions.

Apple TV supports audio encoded in WAV, AAC, Apple Lossless, or AIFF formats. It also plays files protected by FairPlay Digital Rights Management technology, which is applied to all protected songs in the iTunes store. Furthermore, you can view photos saved as JPEG, BMP, TIFF, PNG, and GIF formats, allowing your HDTV to display your favorite images on a much larger scale than your digital camera's screen or computer monitor.

Despite its many features, the Apple TV isn't a one-size-fits-all media player. For example, without an optical drive, it can't replace your DVD player. Additionally, since Apple encourages users to pay for TV and movie content, there is no DVR (digital video recorder) functionality.

You might wonder why you can't simply mix and match similar hardware to create a setup like Apple TV. While it's technically possible, building such a setup for the price of an Apple TV would be challenging. For example, a Mac Mini could do the job, but it would cost more and require the added complexity of managing a full computer.

You could also connect your computer directly to your TV, but that would mean relocating your computer to the living room. If you have a laptop, you can connect it to your TV and play files, using a DVI connector, which functions similarly to an HDMI connection. However, much like your desktop, a laptop isn’t designed to be a permanent part of an entertainment system.

There are other entertainment devices available as well. For example, the Roku is a popular media player that streams videos from Netflix, but that's where its functionality ends. Similarly, Blockbuster offers a direct-to-TV player, and TiVo allows you to stream Netflix, but at the cost of a monthly fee for the service.

Apple TV Controls

Apple TV operates with a graphical user interface derived from a version of OS X 10, specially customized for the device. The remote control is used to scroll through a series of menus displayed on your TV screen, giving you access to audio and video content stored on the Apple TV or from iTunes libraries on any networked computers.

Not long after Steve Jobs unveiled Apple TV, its software was quickly criticized by users seeking more features and flexibility. For example, Apple TV doesn't support Microsoft's copy-protected .WMA (Windows Media Audio) files from a Windows PC. Additionally, Apple TV doesn't allow access to random Internet content like you would get from a web browser, instead limiting users to platforms like YouTube, MobileMe, or Flickr.

In February 2008, Apple responded to user feedback with a major software update called Take 2. This update and its future releases allowed users to replace the Apple TV remote with most third-party universal remotes, enabled volume control during audio playback, added new playlist functions, and brought other features. Most notably, it introduced features that many Apple TV owners now take for granted, like renting movies from iTunes, purchasing TV shows, viewing photos from MobileMe and Flickr, and streaming iTunes audio through Apple TV and your stereo using AirTunes.

The included six-button remote allows you to play, rewind, fast-forward through videos, or skip through audio tracks. However, you don't necessarily have to use the remote that Apple provides. Many universal remotes are also compatible. For instance, you can use a third-party remote to control not just your Apple TV but also your DVD player and TV. Alternatively, you can install the Remote app from iTunes on your iPhone or iPod Touch, both of which have built-in keyboards that come in handy for certain tasks, like typing search terms into YouTube.

Apple TV Hacks and Extended Functionality

After Apple TV launched, users quickly began modifying its hardware and software to unlock new capabilities. Whether you're aiming to expand the features a bit or enable support for different formats, there are countless ways to customize this device. A key warning: While Apple can't prevent you from hacking your Apple TV, doing so may void your warranty. Also, keep in mind that Apple's updates may undo any modifications you've made, although you can usually reapply the hacks with little trouble.

The first hacks targeted the original Apple TV's 40GB hard drives, which weren't big enough to store many iTunes movies (about 1.5GB each) or TV shows (roughly 500MB each), prompting users to replace them with larger drives. Although this process was fairly simple for advanced users, it did affect the device's appearance. These early hacks sparked the creation of sites like AppleTV Hacks, where enthusiasts share tips for modifying their devices.

Software hacks are simpler and more accessible for average users, requiring no physical tinkering with the device. One popular method, the patchstick process, involves downloading free software from the Internet onto a USB flash drive, plugging the drive into your Apple TV, and rebooting the device to boot from the USB. Depending on the patchstick version, this could upgrade your Apple TV with new features, including additional codecs for playing .AVI, .WMV, and other common video formats, as well as enhanced networking capabilities.

Some modifications allow you to access a wide range of online content using XBMC and Boxee. These tweaks are especially popular since they enable the playback of formats that the original Apple TV software doesn't support, like .AVI and .WMV video files. To use Boxee, you must create an account, which opens up a powerful interface for social interactions and multimedia content. Once registered, you can share your thoughts on content with others, stream Netflix, and enjoy more features.

From Apple's and content creators' perspectives, the downside of these hacks is that users gain the ability to play virtually any content they wish, including pirated videos and audio. This not only undermines Apple's meticulously crafted Apple TV business model but also diverts profits from the original creators, who rely on entertainment systems to monetize their content.