Let’s face it, the Apple TV has been one of Apple’s least popular devices on the market.  With all the hype around the iPad, iPhone 4, and their other portable devices, like the iPods, and their MacBook line of laptops, it’s obvious why Steve Jobs calls the Apple TV a “hobby”: it’s just not worth it for the average joe.  But if Apple puts some TLC in the Apple TV, it can be something extraordinary.

Let’s start with the problem.  The Apple TV will cost you some dough (about $230), and then if you want to buy content for it, like a TV show episode, or a movie, it can cost you anywhere from $1-15 a pop.  Sure you can watch the content that you already own which is contained in your iTunes library, but most people get bored watching the same episode more than twice, which makes them delete the episode, or let it take up unnecessary disk space on their hard drive.  Apple figured out that people don’t want to watch the same movie multiple times, and released movie rentals, where you could rent a movie for 24 hours for a few bucks (few additional bucks if you want it in HD).  This made a lot of sense, but if you think about it, it’s still expensive compared to, let’s a say a Netflix plan which gets you access to a huge selection of movies and TV shows that can be accessed from the web or a Netflix ready device like the iPad, or a Xbox 360.  Also Netflix has a wide array of DVDs to pick from, which are delivered to your home’s mailbox.  With websites like Hulu, where you can legally watch a bunch of shows from networks like Fox and NBC, and sites like The Pirate Bay where you can pirate a ton of content, the Apple TV just seems like a expensive choice.

Here are four problems Apple needs to address to make the Apple TV exceptional:

Problem 1: Value

Apple’s advertising solution for their iOS devices (dubbed “iAd”) has been off to quite a good start.  Advertisers have noted higher profits using iAd versus competitors like Admob.  Some developers, like App Store developer Jason Ting, made $1,300 of iAd in one day. Steve Jobs mentioned during the iPhone OS keynote last April that iAd was developed so developers can afford to provide cheap or free applications to the App Store market place.  Since iAd is making app developers enough money to create free or low-cost apps, Apple can use the iAd system for the Apple TV, by placing several 15-30 second ads within a TV episode.  The ads will be enough to pay for theTV shows—making them free to watch.  Since Apple also takes a 40% cut on iAds,  they could use that revenue to justify lowering the Apple TV price from $230, to about $100.  And who knows…maybe Apple is actually working on something like this, considering they bought Lala so iTunes can go cloud-based, and Quattro Wireless for iAd.

Problem 2: Content

Most people can watch TV on their TV, watch movies on their DVD or Blu-Ray players and listen to music on their stereos. Apple TV can do all that, but to make it even more attractve, Apple could create an Apple TV App Store to run on it. Apple TV contains the same processing power as devices like the iPad, which means it’s hardware is capable of running 3rd party applications as the iPhone and iPad can. With a Twitter app, a RSS reader, even a few games, the Apple TV becomes a much more attractive device.  When you have a huge flat screen TV at your disposal,  apps shouldn’t be a problem.  The only problem is how you control and navigate these apps, which leads us to our next problem, control.

Problem 3:  Control

The Apple TV uses a cheap remote which is extremely unintuitive.  It has 7 buttons: up, down, left, right, center, Menu, and Play/Pause. If you know Apple’s style, buttons aren’t the way to go. Instead, they should make the remote a trackpad (just like the newly released Magic Trackpad, only much smaller). This allows you to efficiently scroll through long lists, pinch zoom text, images, and other on-screen content.  This “trackpad” remote could also physically click when you press down on the surface.  Not only will this make navigation on the device easier and more efficient, but it will allow Apple and 3rd party developers the ability to do things that you couldn’t really do well before.  With this remote, you could add apps like Safari, Mail, Google Maps, and more.

Conclusion

The Apple TV has been one of Apple’s least popular devices on the market.  If Apple made TV shows and content free because of iAds, added an App Store for extra functionality, and reinvented their remote by making it a responsive surface, the Apple TV will be something that is more desirable, more logical, and more suited in the living rooms of us consumers.

If you have a feature you think would be great on the Apple TV, leave us a comment below!