Apple TV to become $99 iPhone for your TV, says rumor

In a nutshell, the iPad is a big iPhone; and according to rumors today, Apple TV is set to become an iPhone for your HDTV.

The rumor is that Apple TV, which debuted as an iTunes media streamer nearly three years ago, will be getting a major overhaul that folds it into the iPhone OS ecosystem. Instead of having the device act like iTunes for your television, it is rumored to be based on iPhone 4, and include the same A4 processor used in the iPad and in the 4th generation iPhone prototype found in a bar and sold to the highest bidder in the media.

Also like the iPhone, there is reportedly only a single hard output; only this one is capable of pushing out full 1080p HD images. Apple TV currently includes composite outs, optical audio, HDMI out, USB, and an ethernet port, and puts out a maximum definition of 1280 x 720.

There are two interesting aspects to this rumor.

• Storage-- The actual device will only have 16GB of flash memory, but will be connected to a new, as of yet unannounced cloud-based storage solution. The current generation of Apple TV has a 160GB hard drive.
• Price-- The new Apple TV is expected to cost only $99, while the current model costs $229.

Besides that, this rumor also pushes the iPhone OS further into the business of gaming consoles. Last year, at least one analyst predicted that Apple would make a video game console by 2013; and with the Game Center feature of iPhone 4, the new Apple TV could be just that.