Following the announcement of Google TV there has been some speculation about what is next for Apple TV. According to one report, the next Apple TV device could use the same processor and operating system as the next iPhone. Rather than a touch screen it will provide full high-definition video output to a connected display. It is reported that it will have limited flash memory and will stream media from the internet or a local network. The price-point is said to be just $99.

The Engadget web site says the story has been confirmed “by a source very close to Apple” but there are few details.

It is suggested that the device will use the powerful Apple A4 system on chip processor, as used in the iPad.

The current Apple TV device is essentially a cut down computer with an Intel processor and small hard drive. The 160GB device retails for $229. It includes wired and wireless network connections and an array of analogue and digital audio and video outputs.

By reducing the number of components and taking advantage of the economies of scale of its mobile products and a proprietary chipset, Apple could cut the cost significantly and deliver a more compelling product at an attractive price point.

It is likely that this could work in conjunction with the iPhone, iPod Touch and iPad. There is already a free application to allow them to control the Apple TV.

As with the Google TV platform, there could be opportunities for third-party developers to create applications for the television display, which is not currently possible with the Apple TV without resorting to workarounds.

Further details of the latest version of the Apple iPhone operating system are expected to be announced at the annual Apple Worldwide Developers Conference in San Francisco.

Apple has never released numbers for Apple TV sales and acknowledges that they have been less than they might have hoped. Chief operating officer Tim Cook said recently “We’re continuing to invest in it because our gut tells us there’s something there”.

Steve Jobs, the chief executive of Apple, famously described Apple TV as a “hobby” but there is no doubt that the competition for control of the living room screen is big business. In addition to the iPad he has promised “several more extraordinary products in the pipeline for this year”. Many analysts expect a renewed focus on the television, taking advantage of the other products and services in the Apple ecosystem.