Apple has finally started to act on dealing with a much talked about revamp of the AppleTV product line. The first move by the company was the dropping of the 40GB unit, which is now officially discontinued. As part of this move Apple has also slashed the price of the 160GB model to $229.

While Apple claims that the AppleTV is still a hobby project within Apple, that has not stopped the discussion that Apple has a lot planned for AppleTV; this includes a major software overhaul that many suspect could come as soon as  the next month or two.

In addition, our sources still talk of a revised AppleTV unit that offers both digital video recorder functionality as well as casual gaming support. Of course, this more powerful unit would feature a larger hard drive and likely use the recent Mac Mini Nvidia platform as the guts of what will power the next evolution in AppleTV. We will have to see what shakes out, but our sources insist that Apple has not given up on AppleTV; they are instead struggling to release a model at a price point that consumers want with software support that will make it even more attractive.