The Apple TV was launched back in 2007. Over the past four years Apple has received a fair bit of negative feedback about the device, which it always referred to as a hobby.

The problem with the Apple TV is it's always lacked content and cost far too much – for the device itself, and the content.

On stage at the keynote announcing new iPods, Apple CEO Steve Jobs summarised some of that feedback, claiming users wanted a device that was more consumer electronics and less a separate computer. He added that consumers also wanted something considerably cheaper.

As a result of the feedback, Apple TV is now cheaper. Previously the device cost a whopping £223 now it retails at £99. There's been some debate about the pricing comparison between the UK and US. In the US the device was previously £229, and now costs $99. Clearly the pricing comparison has always been unfavourable to the UK shopper. Bearing in mind that the US price doesn't include sales tax, the UK price before tax, should be more comparable with the US pricing, but excluding VAT the UK price is £84.26 (or $129.76), which leaves UK shoppers paying around £20 ($30) more. In a press release, Apple claims the extra cost "includes approximately £23 VAT, duty, and levies", and notes that, "VAT, duty and levies may vary over time".

Not a computer

Due to Apple's feedback from consumers that they would prefer the Apple TV to be less of a computer, Apple has removed the hard drive. When the Apple TV launched in 2007 it had a 40GB hard disk. The most recent model had a 160GB hard disk. Removing the hard drive is certainly one way to keep the cost down.

Due to the lack of storage the Apple TV will simply stream video from either the iTunes Store or the local network. The good news is that on the inside the specs have been updated to support 720p video at 30 frames per second (the previous model could only hack 24fps, and even then there were often issues). This is a big deal because a lot of TV-show content is shot at 30 frames per second, and Apple wants everything on the new Apple TV to be in HD, including TV rentals (although Apple does appear to plan on offering SD TV show rentals – presumably for any content not available in HD).

There's no support for buying stuff anymore, just renting movies and TV shows – if you want to buy stuff and keep it forever, you'll want to do that on your computer and then stream it to the Apple TV.

The Apple TV's video features rely heavily on an iTunes Store rental model. In the US Apple has deals in place with ABC and Fox. In UK Apple has no such deals in place, but still offers movies and TV shows for rental and to buy on the iTunes Store. It's unclear how the rental scheme will translate in the UK when the Apple TV goes on sale here in late September. In the US TV shows can be rented for 99c, while movies can be rented for $4.99 for the newest titles. Apple says HD versions of the newest movies in the UK will be available to rent for £4.49. Currently new movies can be rented for £3.49 for newer films, or £2.49 for older films. Apple has a deal where films are available to buy for £3.99 at the moment on the UK iTunes Store.

UK TV shows are currently available to buy for anything from £1.19 for an episode of Red Dwarf, to £1,89 for an episode of Grand Designs, and £2.49 for an episode of Ugly Betty. Buying a whole series outright lowers the per episode price.

As previously, rentals must be watched within 30 days; once you begin watching a movie, you need to finish it within 24 hours – a feat we have found often isn't possible. Television shows, on the other hand, get a 48-hour window. For TV shows, the Apple TV will also track which episodes you have watched.

In the US Netflix subscribers can get access to the entire Netflix streaming library on their Apple TV. Apple has not disclosed whether the Apple TV will stream from any of the UK online TV offerings, which include BBC iPlayer and Channel 4OD, or whether it will work with movie rental services such as SeeSaw.

As an alternative to TV and movie rentals direct to the Apple TV it will be possible to stream movies and TV shows from your Mac (or PC) or even your iPod touch or iPhone running iOS 4.1 and using AirPlay. The successor to Apple's AirTunes media streaming feature, AirPlay allows you to begin watching a video or listening to music on one device and then switch to another device. You can start playback on your iPhone, iPod touch, or iPad and then switch seamlessly to your Apple TV with just a few taps. AirPlay will require iOS 4.1, which Apple will ship next week.

The interface itself, it's going to be pretty familiar to current Apple TV users. It's the same remote-driven UI, with a series of menu items from left to right.

Size wise

The device is small – a quarter the size of the original measuring 9.91 cm square and 2.29cm high. The tiny black box that will likely run cool and quiet due to its lack of a hard drive. You can pick it up and hold it in the palm of your hand, easily. On the back is a small selection of ports, far fewer than on the previous model. If you don't have a TV that supports HDMI, forget it – this device has only an HDMI port for video out (and you'll need to buy the HDMI cable). There's also an optical-audio port, an ethernet jack (along with built-in 802.11n networking), and a USB port that Apple says is for support use only and not for any end-user functions.

You'll need to factor in the cots of an HDMI cable to plug your Apple TV into your TV. Perhaps you could cut out the middle man and just use a cable? 

The back panel sports interfaces for HDMI (with resolutions up to 720p), optical audio out, 10/100 Ethernet (complementing the built-in 802.11n wireless), and a Micro-USB port for service and support.

It also ships with the same Aluminum Apple Remote that Apple released last year; you'll also be able to use Apple's Remote app for iOS devices to control the Apple TV.