According to Engadget, Apple has been hard at work on the new AppleTV and if true, it sounds sick! Essentially, the ATV will be a stripped down version of the current model with very limited on-board storage (a rumored 16GB), a quick A4 processor (like in the iPad and rumored new iPhone), will only have power and video-output ports, yet will be capable of 1080P playback (something the current ATV can't do).

This is major news for a device that's received little attention from Apple in its 3 year existence. The best part? It's supposed to only cost $99. I am super, super excited for this and am hoping it's not just a rumor. As Engadget describes, the new ATV will run a much lighter OS, most likely a variation of the iPhone's OS and will rely mostly on a streaming experience (hence the limited storage capacity.) You'll likely be able to access content on your local computers or networks via a Time Machine device or similar (hopefully a external drive hooked up to an Airport Extreme).

One thing Engadget can't confirm, but something I've been expecting, is that the new software will likely run apps and have an app store akin to the iPhone/iPod Touch/iPad. And I firmly believe this is what Apple needs if they want to successfully break into the living room.

For quite some time, I've been considering selling my ATV and purchasing a Mac Mini or possibly the Boxee Box, which has yet to make itself available in stores. It's no secret that the ATV is underpowered and should be able to run more formats and handle 1080P easily if it's going to be a home theater centerpiece. I've wanted to run a Mac Mini with either Plex or Boxee because they're more customizable, they play more formats, and they have app stores that allow you to install third-party apps. Not to mention, they allow you to store your files anywhere rather than directly in iTunes. I've been planning to move all my media onto an external 1TB drive hooked up to my Airport base station.

But this new ATV could change that. An app store would be fantastic for the ATV. Currently, with Boxee/Plex, I've installed a number of different apps- Last.fm, Pandora, Flickr, Picasa, Revision3, among others. One app I haven't found yet but I'm hoping will come out soon is the NFL SuperFan app which allows DirecTV customers to watch the SuperFan, and more importantly the Red Zone, channels on the iPhone but also on a computer. Right now I'd have to use a Mac Mini for it, probably using something like Fluid to make it couch-distance friendly, until they come up with an app for Boxee/Plex. But since the SuperFan app already exists for iPhone, if the new ATV used the app store, it would be relatively ready to go for the big screen.

Also, imagine the possibility for games. Apple definitely wants to improve in that space, especially with the announcement of the Xbox360-like Game Center coming in OS 4.0. Imagine using your iPhone/iPod Touch/iPad as a controller for games you're playing off of the new ATV! I'm not suggesting that the new ATV would compete with the XBox360 or PS3 or even the Wii, but it could definitely be a quick, easy, friendly way to just do some light gaming. I play Shrek Kart Racing on my iPhone all the time, but I would definitely be interested in playing on my TV.

So it's obviously really early to know what exactly they're going to do and Engadget has proffered that there will be no announcement next week when Apple will likely unveil its next iPhone. But this is really exciting, and if these rumors are correct, the AppleTV might finally get the attention it deserves.