It looks like there's a whole new Apple TV on the horizon, one that combines the TV with internet video in ways that Apple TV never has before.
The new Apple TV is all about streaming video. It's moving away from the model of local storage and will be focusing the new Apple TV on cloud-based storage, meaning that video will be streamed off of the Internet, rather than waiting for a download then viewing it. Old school Time Capsule peeps can still use that feature with additional hardware.
The news came from Engadget, who talked some magnificent talk abut Apple TV being offered for only $99, as compared to the previous $189, with 16GB of storage. This is less storage than before because the focus is on streaming video, not storing it on your Apple TV box. This helps lower the cost, and also smartly works around copyright issues that come with downloading (and thus owning) a video. In streaming video, you don't own the video, you just access it off of the Internet to watch it. Things are much cleaner for everyone that way: the user gets it for cheaper, Apple doesn't have to play hardball in royalties negotiations, and the copyright holder can get paid whenever someone watches.
Apple TV will have support for 1080p HD (high-def) video, meaning the quality will be great. Fuzzy, blurry videos need not apply. It's also based on the operating system of the iPhone 4, which means greater alignment between all of Apple's devices. iPhone owners will also get the same kinds of capabilities on the new iPhone set to be introduced at Apple's WWDC show next week.
Apple TV will also have support for iTunes and Flickr. This is interesting, because Google recently announced their Google TV, and the two are sure to be going head to head with Apple TV for consumers.