Apple isn't kidding. AppleTV really is a hobby

Steve Jobs famously touts AppleTV as "just a hobby".  This all started at the 2007 AllthingD conference where he said:

“We’re in two businesses today, we’ll very shortly be in three, and a hobby”, Apple’s CEO Steve Jobs told Walt Mossberg in an on-stage interview at yesterday’s D: conference. The first two are computers and digital music (iPod/iTunes), and the third will be the cell phone market which Apple will enter next month with the launch of the iPhone. And the hobby? The company’s recently released set-top-box, the AppleTV.
“The reason I call it a hobby is a lot of people have tried and failed to make it a business. It’s a business that’s hundreds of thousands of units per year but it hasn’t crested to be millions of units per year, but I think if we improve things we can crack that.”

In an October 2008 conference call he was questioned about the AppleTV as a hobby:

Bill Fearnley – FTN Midwest: [...] Steve, how are you thinking about Apple TV now? [...] If you look at the digital living room category and you look at the upcoming year of 2009, how do you look at the digital living room opportunity and how it relates to Apple TV?

Steven P. Jobs: Well again, I think the whole category is still a hobby right now. I don’t think anybody has succeeded at it and actually the experimentation has slowed down. A lot of the early companies that were trying things have faded away, so I’d have to say that given the economic conditions, given the venture capital outlooks and stuff, I continue to believe it will be a hobby in 2009.

Today Apple released the new version of the AppleTV OS version 3.  The last major release was two years ago and 2.3, the latest point release, was released almost a year ago.  Over the past year Apple has only added the following:

iTunes Extras, Genius Mixes and Internet radio.  The interface is also improved.

I have a few hobbies.  I like to go mountain biking.  I do it on the weekends sometimes if the weather is OK.  I also am a pilot and consider flying a hobby.  But I haven't done it in over a year...maybe two. 

Apple means it when they say AppleTV is a hobby.  They've done about a week's work in the past year or two on the AppleTV.   All of the improvements they did were just brought over from iTunes.

That is to say, AppleTV isn't actively being worked on.  If some of their engineers have some extra/down time for a week or so then they get to do improvements? 

My theory is that Apple has had all of their best talent in the past two years working round the clock on the Tablet - so the AppleTV gets neglected.

And that leaves AppleTV pretty anemic.   It doesn't play content off of a share, it doesn't play Avi, MKV, etc. files, it doesn't do 1080P. And it certainly won't do Hulu or Netflix for fear of eating into theu iTunes revenues.

Some think it might be the industry that is holding Apple back, and it might be, but why have other competitors done so much better? 

I'd rather have a Seagate FreeAgent theater at under $100 that plays all kinds of formats and plays videos off of a NAS at 1080P, something AppleTV can't.  Other companies make siilar products.

Or even better yet, get a Mac Mini from a few years back and throw Plex on it.  Plex is by far the best media center on the Mac and does a lot of the things AppleTV doesn't.

Although the interface isn't amazing, Boxee is another option for getting a quality media center on your Mac or AppleTV.

In any case, Apple's AppleTV hobby should be approcahed as one.  One that may or may not have a future.  For the same $229 price, you can get much more interesting alternatives that browse NAS shares, play all formats, and are starting to include services like Hulu and Netflix.