Hallelujah. Steve Jobs is finally serious about Apple TV.

At a press event yesterday, Apple (Nasdaq: AAPL) unveiled a new box capable of streaming Netflix (Nasdaq: NFLX) movies as well as high-definition programming. TV episode rentals are to begin at $0.99, while the box itself sells for $99. Thus ends the era of Apple TV as a hobby for the Mac maker. Now, it's a business, but not much of one.

Time to tune in a strategy
Anyone who thinks this changes Apple TV hasn't been paying attention. This is a price cut with a few add-ons, and that's all. Worse, the moves appear to be driven by fear rather than strategy. You can almost hear the conversation at Apple's Cupertino headquarters. "Google's (Nasdaq: GOOG) got a set-top box coming out? Uh-oh. Better make sure ours is cheap enough to sell."

Before you start typing about how I'm just another basher of Apple and its stock, consider that I'm getting no joy from this. I'm an Apple user and shareholder. But unlike my Foolish colleague Eric Bleeker, I see no reason to get excited. Unless you're Wal-Mart (NYSE: WMT), whose business depends on competitive discounting, a price cut doesn't equal a strategy.

Failing to solve the big problem
More troubling is that Apple TV doesn't solve the big problem in home entertainment. It's just another box, modestly different in function from what TiVo (Nasdaq: TIVO) and Cisco's (Nasdaq: CSCO) Scientific Atlanta division offer. The burden is on the consumer to set up the box, connect it to a TV, and ensure that existing cable or satellite services aren't disturbed by its presence.

At $99, consumers may not care that Apple TV requires work. But let's also not kid ourselves: the iEmpire was built from the ashes of computing and entertainment systems that required work to assemble, install, and maintain. Apple TV is antithetical to the Mac, iPhone, iPad, and iPod in this sense.

But again, the bigger issue here is that Jobs and his team aren't thinking big enough. In the living room, consumers need less, not more, components, and they need a TV experience that combines the innovations we've seen to date:

  • Pausing of live TV (TiVo)
  • Access-anywhere programming (Slingbox)
  • Web connectivity (Google TV, Apple TV)
  • Video on demand (Apple TV, Netflix Watch Instantly, cable providers, etc.)

Apple TV accomplishes nothing new in this sense. And please, don't talk to me about HD delivery. None of us needs Apple TV to get HD programming.

Take the name literally, Steve
Apple TV should be what it sounds like: a television set with all the features I described above embedded within. This wouldn't be cheap, but it would eliminate components while preserving features. No assembly required. Turn it on, use your remote, and get your programming. Record what you want. Order the TV shows and movies you want. Stream TV programming to your iPhone if you want.

Apple would need to ramp up manufacturing and could sign licensing deals to make this happen. One with TiVo, to embed and tailor its software for iOS, and another with DISH Network (Nasdaq: DISH), to active the Slingbox service from a remote.

It wouldn't be easy to broker arrangements with mortal enemies TiVo and DISH, but impossible? No, not at all. This, after all, is the company that just put Netflix on Apple TV -- despite Netflix's close work with Microsoft and Reed Hastings being on their board.

Jobs has the skills to develop the alliances necessary to make Apple TV a runaway success. But it won't happen unless he starts thinking bigger than he is now.

Now it's your turn to weigh in. Is Apple TV the breakthrough you've been hoping for? Please vote in the poll below and then leave a comment to explain your thinking.

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Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He had stock and options positions in Apple and a stock position in Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. The Motley Fool has written Cisco calls and owns shares of Google and Wal-Mart. The Fool is also on Twitter as @TheMotleyFool, and its disclosure policy has reached its full potential, thank you very much.