In his Q&A appearance with Walt Mossberg at the D 2007 conference today (as reported live by engadget), Steve Jobs called the Apple TV project  "a hobby"... and then raised the curtain on two blockbuster Apple TV announcements that showed it to be anything but.

Jobs remarks about the Apple TV he later explained were prompted by the fact that it was not yet one of Apple's core product lines because "lots of people have tried and failed to make it a business". Jobs said that he believed the Apple TV could crack millions of units a year if they continue to improve it, however.

Then he proceeded to demonstrate that Apple is committed to continuing to improve the Apple TV. Jobs demonstrated a new Apple TV software upgrade that will allow Apple TV users to search for and view YouTube video as streaming content direct from the Apple TV. Users will also be able to log directly into their personal YouTube accounts to watch and save videos. YouTube content will be streaming only, and cannot be stored on the Apple TV hard drive. This software upgrade will be released as a free download in June.

Later, in conjunction with the YouTube announcement, Apple also revealed that they would now be selling a custom configuration of the Apple TV unit through the online Apple Store with a 160 GB hard drive for $399 US. (This configuration is not available on the Apple Store pages at this writing, but is expected shortly.)

CouchGuy's take: I find streaming so reliable on my own Apple TV that I have no particular need for the new 160GB version, but I applaud Apple for making the larger unit available for those who do want it. I expect that the whole point will be moot eventually as I still cannot imagine that Apple does not intend to enable the existing USB port for use with an external drive. The YouTube connection is one I predicted in this blog some time ago. (I still believe a Joost plugin is inevitable as well.) Steve seemed amused at the D conference demo to be showing low-resolution YouTube videos on a huge floor-to-ceiling screen using Apple TV, but the feature is bound to be a popular addition to the Apple TV's menu and is just a hint that Apple hasn't even begun to show just how versatile and expandable the Apple TV can be.