Let me just say that I'm still rather undecided as to whether or not Apple will in fact bring their own television set to market. I did, however, find it a really fun challenge to try to imagine what a true Apple TV might be a like. Take from it what you will.
First off let's assume a few things. Let's just assume, for the sake of this article, that Apple is unrestrained in terms of having to bend to the whims of the content owners, cable companies and "traditional" television business practices. We all know this antiquated business is clinging on to their archaic business plans with a death grip of what I like to call future-blindness. What I'm going to describe is what an Apple TV might be like in a world where these problems had been solved or surpassed somehow.
The Hardware
Form Factor
Simple. 3 sizes. 30 inch, 40 inch, and 50 inch screen models. Each with a 7 millimeter black bezel around the edge. No Apple logo on the front.
Input & Output Ports
2 HDMI inputs. 1 ethernet port. Built-In 802.11n WiFi. iMac style removable power cord. 1 optical out port. 1 Thunderbolt port allowing you to use the TV as a monitor, or to connect an external hard drive, or many other peripherals.
The Remote
An iPod Touch. In the box, included with the purchase of the TV. Comes pre-installed with new version of the official Remote app. This new version of Remote.app uses Apple's Bonjour technology to automatically find the TV and begin guiding you through the setup process (more on that later). It has features that allow labeling and selecting of your 2 HDMI inputs, with pre-made beautiful icons for Xbox 360, PS3, Blu-ray players, etc. Much in the same way that Mac OS X displays beautifully renderred icons for most printers you connect to. Switch between the devices and your main TV with a simple scroll view control (similar to your iPhone's homescreen).
Software and Content
This is the fun part. Forget the entirety of the current Apple TV interface.
Muggles & Luddites
Apple makes products to serve the masses. The current Apple TV (the hockey puck shaped one) is awesome for geeks like you (assuming most reading this would consider themselves, at least in part, a geek). It does not however, serve the muggles and luddites out there who want to come home after a long day of work, flip on the TV, instantly be seeing some content, kick back, have a brewsky and take a load off. The hockey puck's software serves those of us who want to watch specific things at specific times very well, but doesn't even try to accomodate what I would call the "average" viewer.
How do we solve this problem without also removing the power of the on-demand style viewing? You do both at once. Here's how it could work:
You turn on the TV, it's instantly on, I'm talking no more than a second. There are channels, just like your current TV. They correspond to each of broadcast and cable networks. So there's an NBC channel, there's a Discovery channel, there's an ABC, a CBS, a Sci-Fi, a Food Network, etc, etc. Sound familiar? What is this channel showing? Well it's showing whatever would currently be on that channel at that time if you were watching a "regular" TV. Instead it's coming to you over the internet. The tech behind this is that Apple already has every single episode of all the shows they offer in iTunes. The networks and content providers often upload the whole season to Apple's servers ahead of time with scheduled release dates and times. So what Apple does is simply stream each of these episodes on their respective channels at their respective times. No commercials, for one monthly price (more on that later).
I know what you're thinking, "But Jake! What about my live content?! News? Sports?" Don't worry, Apple has you covered, they've arranged deals with the major networks (again we're ignoring the difficulty of signing such deals) to simulcast these sorts of programs on their respective channels at their specific times. There's a CNN that is basically the same CNN you're used to seeing now. They even broadcast things like sports games, breaking news and "special extreme car-chase coverage" events in such a way that the viewer could choose, for example, to instead of watching that ball game that somehow has gone into 6 extra innings, watch tonight's epsiode of "Conan", which normally would have been pre-empted. Thanks to the Apple TV software, the viewer can choose to watch the ball game stream on TBS, or switch to the "regularly" scheduled program of "Conan". The remote simply displays a screenshot of both possible peices of content on that "channel" and the user can switch back and forth between them.
The user can obviously now pause, rewind, and even fast-forward almost anything they are watching, no matter what. No more DVRs, no more scheduling, no more hassle. It all just works.
Content is available to watch as soon as it would have broadcasted to "regular" TV. Movies are available to be viewed as soon as they are released in theaters. Think kicking back and watching "The Dark Knight Rises" at midnight on release night. (Again suspend your disbelief and pessimism about how insanenly difficult it would be to get board-room types to agree to this, we're into pie-in-the-sky, in-a-perfect-world type stuff here.)
On-Demand
Like I said before, many users would likely still want to pick and choose a show or movie at random to watch at their leisure. No problem, simply switch the "Browse" vs. "Live" toggle at the top of the app to "Browse", and instantly the app lets you browse through a beautifully redesigned iTunes store-like view to find a peice of content to watch. See something interesting? Drill in to read a full synopsis, see reviews, etc. Tap one button to watch a preview of any content you find, it will begin playing on your TV. Like what you see? Just tap "Start Watching Now" to start the full version of that piece of content from the beginning. Change your mind? Flip the "Browse" switch back to "Live" and you're controlling live TV again, the app never loses your place or stops playing.
Other Content
What about YouTube? Vimeo? They're gone. These are apps that are meant to live on the iPod Touch that came with your TV. All of these "external" sources of content are gone from this Apple TV.
The Interface
Almost non-existant. Almost everything happens on your Remote app on the screen of the included iPod Touch. The TV itself will display things like whether or not the TV is muted or not muted, or identifying information when the current program, channel, or input source changes (only for a brief moment of course).
Under The Hood
It's running iOS. It does not have an App Store. This is done purposefully to encourage developers to deliver content by using AirPlay. In Apple's world, The Twit.tv's and Revision3's should make apps for the phone or tablet platforms that offer rich content browsing expieriences, with a simple AirPlay mechanism to "sling" it up to the TV, much as they encourage content providers to do today, with iOS 5 and the hockey puck model. It does support iCloud and can instantly browse through your photos, movies, etc.
Pricing & Plans
The Device Itself
The new Apple TV starts at $999 for the 30 inch model, $1499 for the 40 inch, and $1999 for the 50 inch model.
The Content
This one is the key. Apple is going to replace your cable company, your Netflix, your Hulu, everything. One plan, one signup, one monthly bill. The price? $49 USD a month. High enough to pay the content providers enough to make them happy, low enough to entice most people to make the switch. For your money, you get everything I've described above, all the content, all the movies, all the TV shows, anytime, all the time. No more buying single episodes, no more renting or buying movies. It's all right at your fingertips.
Conclusion
I hope you've enjoyed this hypothetical trip into the proverbial chocolate factory that is Apple's design studio. Just so we're clear, I do want Apple to make a TV. I'm sure it would be awesome, otherwise they wouldn't waste their time making it. I'd love to see some of the ideas I've described here in some form or fashion show up in that final product, but even if they don't, I'm sure it would still be something pretty great.