It was upgraded later of course, but it was still just a kind of an "iTunes extender" for the living room. And even seen like that it had some issues: iTunes content could be accessed only if you had it downloaded first to a network computer- and they looked bad on big screen TV because iTunes were optimized for the small screen of an iPod.

A makeover brought free software upgrade and some changes to the iTunes Store, but the hardware remained as it was a year earlier. Direct access to the iTunes Store from the Apple TV is enabled, so you do not need to download any longer iTunes to your network computer. The videos start streaming from the Web within seconds if you have a good broadband bandwidth. The software update also enables the possibility to access online photo galleries from Flickr and .Mac accounts. All these new features come together with the old ones: the aptitude to access a complete collection of online podcasts and YouTube videos as well as the mass of the digital photos and iTunes music and video library already sitting on any of the PCs and Macs on your home network.
The Apple TV measures 7.7 inches per side and it is just 1.1 inches high. It has a small, silver square shape with rounded corners. With those small dimensions, the Apple TV will fit just about anywhere. It has a classic Apple design with a front panel that has only a power light and the remote sensor. No buttons and no front-panel display are included.

Here are the technical specifications about the Apple TV (40GB):
Manufacturer: Apple
Product Type: Digital multimedia receiver
Connections: Connector Type 1 x Component video output ( RCA phono x 3 ) - Rear, 1 x HDMI - Rear, 1 x Audio line-out ( RCA phono x 2 ) - Rear, 1 x ( RJ-45 ) - Rear , 1 x SPDIF output - Rear, 1 x - Rear
Connectivity Protocols: IEEE 802.11a, IEEE 802.11g, IEEE 802.11b (Wi-Fi), IEEE 802.3 (Ethernet), IEEE 802.3u (Fast Ethernet)
Connectivity Wired: Wireless
Depth: 7.8 in
Digital Player (Recorder) Device Type: None
Digital Storage Media Hard disk drive: 40 GB
Network & Internet Multimedia: Functionality Digital audio playback, Digital photo playback, Digital video playback
Optical Digital Output: Yes
Power Consumption Operational: 48 Watt
Power Type: Internal
Remote Control Technology: Infrared
Remote Control Type: Remote control
Supported Audio Formats: AAC, MP3, WAV, AIFF, Protected AAC, Apple Lossless
Supported Pictures Formats: BMP, GIF, JPG, PNG, TIFF
Supported Video Formats: H.264, MPEG-4, Protected H.264
Supported Video Resolutions: 30fps, 30fps, 30fps
System Max Recording Capacity: 50 hour(s)
TV tuner type: None
Weight: 2.3 lbs
Width: 7.8 in