So, after suing folks who published ‘rumors’ of upcoming Mac products, his Steveness decided to do some rumor-mongering of his own today with a classic ‘one more thing’ during today’s announcement of iTunes 7 and the new feature films on the ITMS. Flying in the face of the Apple-PR bible, he confirmed the existence of an unreleased product well in advance of release: a Macintosh set-top-box optimized to connect directly to HD tv sets. Codenamed ‘iTV’, (and priced at $299) the new box is due in Q1 2007, and will be 1/2 size of Mac Mini, built-in power supply (no brick!),

• Networking: 802.11, Ethernet (not sure what flavor of 802.11, though)
• USB2
• Video: HDMI connector for the best HD goodness or component RGB
• Audio: Analog via RCA jacks or optical digital

Steve also shows off the UI, a very slick and more 3-D treatment of the existing Front Row interface for the new device and wows the crowd by playing an HD-quality flick. At root, this completes an ecosystem – rather like ITMS and the iPod did for music, you now have a STB device (the iTV), a storefront (Showtime in ITMS/iTunes7), and a portable outlet. If they can bring more content aboard, this has a good chance of taking a strong foothold.

Problems I see – no TV tuner or information on how this might take incoming video from your existing cable or satellite vendor. It’s also unclear if this is going to have a hard drive at all, or provide any kind of DVR features. And I’d worry about the stability of the wireless connection for HD video content (I know my Windows Media Center and 802.11pre-N network struggles with SD at times). I suspect that the lack of a tuner and possibly of a drive are quite intentional – you’re probably less likely to buy flicks and shows on the ITMS if you have free alternatives like ripping content off the cable and saving it to your drive. That sucks. But if this provides access to HD movies, I’m sure I’ll be buying one as soon as it’s available.