The hobby. A hard drive that synced from iTunes over the network rather than streaming, essentially an iPod for the television.
Released March 21, 2007 · Discontinued September 1, 2010 · From $299 (40 GB)

Steve Jobs called it a hobby. For once the modesty was accurate. The first Apple TV ran a 1GHz Intel Pentium M, held a 40 or 160GB hard drive, and worked by syncing content from iTunes on your computer over the network, which made it an iPod for the television rather than anything more ambitious. It could not stream from the internet on its own at launch. Apple added rentals and direct purchases in a software update a year later, which helped. It ran hot. The hard drive was the loudest thing in the room, and it sold in numbers Apple never disclosed, which tells you enough on its own.
The first Apple TV did what iTunes asked of it and little else, which is exactly where reviewers drew the line.
The Apple TV is great at everything it was built to do - serve as a plug and play solution to interact with your iTunes media.
For everyone else (read: lots and lots of Engadget readers), until larger-scope issues are addressed, this is likely to be relegated only to novelty set-top box and weekend hack project.