Apparently, Apple’s A4 chip — which drives the iPad and iPhone 4, and would also be the heart of the iTV — isn’t able to handle 1080p (or 1080i) HD video. If true, that would be surprising, since the iPhone 3G S was shown to play 1080p video (albeit not very well) a year ago. Being stuck with 720p video won’t kill iTV right out of the gate, but it would bring to light some interesting limitations of the A4 chip.

App-wise, the sources aren’t clear if iTV will have access to iPhone and iPad apps. It will have access to some sort of App Store, though, even if it’s only for iTV apps.

Since 2007, Apple has considered the Apple TV “a hobby”. One of the most common observations after the Google TV unveiling was just how much Apple dropped the ball with Apple TV. We brought it up when the Roku Netflix set-top box was unveiled two years ago, and former VentureBeat writer MG Siegler wrote an impassioned piece on how Apple could fix it last year.