The Apple TV is Apple's first set-top box, designed to play your iTunes movies and music through your TV and home entertainment system. Like most Apple products, it's both impressive and disappointing, inspired and crippled. We love it, but we're not sure we like it.

"If you've seen all those TV commercials touting how you can watch YouTube on the iPhone, you've been seriously misled."

As you can see in Figure A, the Apple TV looks like a half-height Mac Mini. It's small and is almost unnoticeable among all the rest of the gear in our entertainment center.

FIGURE A

The Apple TV is the svelt silver box on top. Click picture for a larger image.

What it does
Let's start with what the Apple TV does, when it does it right. Assuming everything works (which, as we'll see in a minute, is an improbable assumption), the Apple TV connects up to five PCs or Macs running iTunes. The Apple TV will sync with one such machine, and stream from the others -- up to the available storage on the Apple TV's relatively small 40GB hard drive. There's also a 160GB version, which we did not test. The 40GB model is $299, the 160GB model is $399.

If you've got one machine with a pile of music and video files, the Apple TV will reach out and download those music files and video files from the first machine, up to the capacity of the drive. It'll then play the music and video right off it's own drive. For the other iTunes hosts, the Apple TV will merely stream the media and play it back.

As you can see in Figure B, the Apple TV has a very clean, couch-friendly interface.

FIGURE B

The Apple TV interface is quite clean and easy to use. Click picture for a larger image.

As you can also see in Figure B, the Apple TV appears to play YouTube videos right on your TV. Which brings us to the Apple TV's many, many, many, many limitations.

YouTube limitations
Since we've just seen the YouTube screenshot, let's start with the Apple TV's YouTube playback. If you think that supporting YouTube means you can play any YouTube video you want, think again. Most YouTube videos are in Flash format. Apple TV doesn't support Flash. If that seems like a fatal gotcha, you'd be right.

Apple TV only supports videos converted to the H.264 codec, which is one of Apple's favored formats. Of the five million or so videos on YouTube, maybe ten thousand have H.264 support. By the way, we understand this is also a limitation of the iPhone, so if you've seen all those TV commercials touting how you can watch YouTube on the iPhone, you've been seriously misled. You can watch a few YouTube videos, but only a few.