Rather than relying on local storage—the next Apple TV is rumored to have just 16GB—Apple will offer network streaming from devices like Time Capsules while moving to cloud-based streaming that works within iPhone OS. With just a power plug and video out, the next Apple TV will stream 1080P movies to your TV. That's right—no ethernet.
The rumor comes with no explanation on app support, nor does it explain whether or not the next iPod touch will feature all of the same capabilities (frankly, there's no reason it shouldn't). And actually, it does nothing to explain why the next Apple TV will be any more appealing than the current Apple TV. So what if Apple TV will have high def streaming—the current Apple TV does, too, even if the service is 720P (nothing that's Blu-ray quality is traveling from the cloud, through your Wi-Fi, onto your screen, trust me). So what if Apple TV is cheaper? Nobody ever wanted it in the first place.
The key to any Apple TV relaunch will need to be, and will be, apps. With apps, Apple TV becomes a game console that undercuts the Wii. And with apps, Apple can advertise their iAds in the living room.
I'm taking bets: How long until the iAd is the new commercial in the TV show you downloaded? How long until we're right back at square one? [Engadget]