At Macworld 2007, Apple CEO Steve Jobs announced Apple's digital media player that can stream movies, music, and photos from networked PCs and Macs.

Apple TV is a network media box that streams movies, music, TV shows, podcasts, and photos from the iTunes library on your PC or Mac to your HDTV. The box, which looks like a squashed Mac Mini and measures 7.7 by 7.7 by 1.1 inches (including an integrated power supply), connects to your TV via either HDMI or component video and audio, and wirelessly syncs content from your iTunes library so that you can enjoy it in the living room using the included remote. As promised, Apple TV will be available in Australia in February for AU$449.

The first bit of good news is that Apple TV uses 802.11n; it can connect either to an 802.11 AirPort Extreme Base Station -- also announced at Macworld -- or directly to a newer Mac with integrated AirPort Extreme. If you do not have 802.11n, you can also connect it via wired Ethernet. The faster 802.11n protocol means Apple TV should deliver smoother video streaming, even at HD resolutions, and make the product more futureproof. (Whether you can stream from existing 802.11g devices -- or do so at acceptable speeds -- is unclear.)

Once Apple TV is up and running on your network, iTunes automatically recognises it, and you can set it to automatically sync unwatched or new purchases or manually choose the content you want to stream to Apple TV. The device can sync with as many as six computers. We were surprised to see that Apple TV has its own storage, specifically a 40GB hard drive that Apple claims is sufficient to store up to 50 hours of movies and TV (in H.264 1.5Mbps video at a resolution of 640x480 with 128Kbps audio). Alternatively, the drive is sufficient to store 9,000 songs in iTunes standard 128Kbps AAC format or 25,000 photos.

The advantage of local storage is that, since it doesn't actually stream in real time, it is likely to work even if your computer is not turned on. Theoretically, it is also possible to bypass your computer altogether and download content straight from iTunes to your Apple TV, but so far, it sounds like this functionality may be limited to movie trailers and similar short-form content from Apple.com rather than the iTunes Store itself. Further, it sounds to us like you first need to stream an entire movie or show to the Apple TV's hard drive before you can begin watching it. (We'll need to get our hands on the product to verify all of this.)

Another big question mark was the file formats that Apple TV would support, and here we have some clear answers. It goes without saying that Apple TV will work with any standard iTunes format. Audio formats include AAC, protected AAC (from iTunes Store), MP3 and variable bit rate MP3, Apple Lossless, AIFF and WAV. But the bigger news is that it supports wide-screen, high-definition video, more specifically 1,280x720 at 24 frames per second, aka 720p. That means you will be able to view movies and TV shows at better-than-DVD quality -- as long as you can get them from iTunes Store. Other video formats include H.264 and protected H.264 (from iTunes Store), 640x480 at 30 frames per second; 320x240 at 30 frames per second; and MPEG-4, 640x480 at 30 frames per second. Finally, Apple TV supports all standard photo formats, including JPEG, BMP, GIF, TIFF, and PNG; you can view photos in slide shows on your TV.

iTunes Store users in Australia do not currently have access to movie downloads. In the United States, the movie selections on iTunes are limited to Disney and its affiliated studio brands, such as Touchstone and Miramax. But at Macworld, Apple CEO Steve Jobs also announced a deal with Paramount that makes an additional 250 movies available for iTunes, the iPod, and now Apple TV. The introduction of Apple TV makes it more apparent than ever that Apple should rapidly expand the video offering of iTunes Store, make more of it available in wide-screen HD formats, and especially provide the option for a monthly subscription fee like many of its competitors do.

There are other network media receivers that offer more features, but the clear ace up Apple's sleeve is that Apple TV works seamlessly with iTunes and, most notably, with the iTunes Store -- something nearly no other streaming media receiver can claim. And given Apple's market share with the iPod and iTunes Store, the advantages of Apple TV will outweigh what appear to be shortcomings -- at least on paper.