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The rumors were correct, Apple has indeed used today’s special event to launch the second generation of Apple TV.  The iTV name doesn’t seem to have stuck, as it will continue to use the Apple TV name, but everything else is really different.  First of all, the box itself is a quarter of the size of the first-gen and is now a cool dark grey color.

Surprisingly given the size, the power supply has been built-in and around the rear there are a few connections in the shape of an HDMI socket for both video and audio and an Ethernet socket, although it does have 802.11n Wi-Fi inside too.

Using the supplied remote control, there is an entirely new UI to navigate through, and it now only offers rentals, but all in HD.  For this reason there is no storage inside the new box, although you can stream content from your Mac or PC.  Inside the new Apple TV UI, you can rent movies through iTunes, stream from Netflix, MobileMe and YouTube and listen to radio and podcasts too.

The cost of the HD movies and TV shows are as follows: $4.99 for ‘first-run’ films and $0.99 for HD TV shows, down from their previous $2.99 price point.  At this stage, only ABC and Fox will be adopting this pricing structure, however Steve Jobs, ever the optimist, doesn’t expect it to be long until others join them!  You’ll be able to read reviews via Rotten Tomatoes, see what others have rented and even stream content using the new Airplay feature to be seen in iOS 4.2 too.

The price of the unit has taken a tumble, from $229 to $99, and is expected to be on sale in four weeks time at the end of September.  You can pre-order yours now though.

(picture: GDGT)