Apple eliminates 40GB TV model, lowers 160GB version to $229

Apple slashed $100 off the 160-GB model of the Apple TV and discontinued the 40-GB version of the home media player over the weekend.

Apple is now selling the 160-GB model for $229, which was the price of the smaller version before it was discontinued. Apple is offering shipping at no charge.

With an Internet connection, the Apple TV device can be used to buy and store movies, TV shows, and music. Apple TV also can be used to display photos and other content on an iTunes-carrying PC or Mac through a wired or wireless connection.

Piper Jaffray analyst Gene Munster had previously expressed similar sentiments. According to Munster, Apple could offer a full-fledged television set as early as 2011. The device is expected to feature advanced media functions and would be capable of synchronizing with iPods, iPhones and Mac computers.

The argument that Apple will not enter the television market because prices have declined by approximately 70 percent in the past three years is a similar argument used to conclude Apple would not enter the cell phone market, given phones had seen similar price declines, Gene Munster wrote in research notes to clients.

The bottom line, 10 million HDTVs sold in the US a year is a real market, and if history repeats itself, Apple will find a way to compete in a commoditized market with a premium priced product.