Next-gen Apple TV to cost $99, run iPhone OS 4.0

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Apple is reportedly readying some big changes for its "hobby" set-top box project. According to sources "very close" to the company talking to Engadget, the next generation Apple TV will shift focus from local to cloud-based storage, while building on Apple's strengths as a mobile device company. The new hardware was described as an iPhone without a screen," as it is based on the same A4 processor as the upcoming model with only 16GB of storage and running iPhone OS 4.0.

It isn't clear whether or not the new Apple TV will be compatible with software from the App Store, though it makes sense considering the shared platform. The device is said to be quite small, with ports for the power and video out only, and will be capable of up to 1080p HD streaming over the web or from other computers in your network. Also, the projected price being tossed around is just $99, which is uncharacteristically cheap for an Apple product.

Currently, the Apple TV costs $229 and comes with 160GB of storage. The rumored low price for its successor might finally get people interested in Apple's set-top box. It remains to be seen if the company will change its content strategy and finally open the device to support video and audio from sources other than YouTube and the iTunes store. With Google readying its own TV platform competition could get very interesting in this market.

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