“Ever since Apple TV hit store shelves in early 2007, company executives have insisted on calling this curious little box-shaped gadget a ‘hobby,'” Arik Hesseldahl reports for BusinessWeek.

“It’s time to drop the hobby talk. First-quarter unit sales of Apple TV tripled from a year earlier, in part due to a software update introduced a year ago that lets users rent movies, including some in the ultra-crisp high-definition format,” Hesseldahl reports.

Still, “Apple is clearly not exploiting Apple TV to its fullest potential. It remains at hobby status when it should be considered an ‘A Team’ product,” Hesseldahl reports. “One idea already out there: Buy TiVo. Under this scenario, Apple would acquire the digital video-recorder pioneer and turn Apple TV into a DVR.”

MacDailyNews Take: How does that help iTunes Store TV sales and rentals? Believe it or not, it might. Being able to record anything on cable / satellite via TiVO offers vastly more content than Apple can offer at this time or during the foreseeable future. And, while the content issue is better than it was, it’s also the main issue with have with an off-the-shelf Apple TV: not enough content.

But what if Apple created a premium “No TiVo” tier (major network TV series, newer movies) and instead offered attractively-priced season passes for that programming while continuing to sell and/or rent newer movies, as they do now? That way, you could record a football game on NBC with your Apple TV’s built-in TiVo, but you’d have to buy NBC’s “The Office.” Remember, for your money, you do get it commercial-free. Likewise, you’d be able to record TBS’s broadcast of “Animal House” (all cut up and with commercials), but you’d have to buy or rent “Iron Man” until a certain period of time elapsed. Of course, you could also buy “Animal House” in its original form, and without all of those commercials, which some customers would obviously prefer.

Viewers are already conditioned to expect certain limitations (especially with feature films), so Apple might be able to sell the concept. Apple could also offer customers a choice of X number of TV series for a nicer price, letting viewers mix and match. This way, Apple TV owners would get a tremendous boost in content via TiVo and iTunes Store would continue to handle to “premium” content for sale and/or rent. Add in MLB, NFL, Premiere League, etc. season passes and you’d have a killer product for sports fans, too.

Hesseldahl continues, “My take is that Apple needs to allow for the same degree of flexibility around Apple TV as it does for the iPod. Remember that while Apple has sold more than 5 billion songs on iTunes, your average iPod owner only buys about 30 songs from iTunes. The rest come from other sources—existing CD collections, files downloaded from file-sharing networks… The iPod succeeds not only because it has iTunes behind it, but because it works with so many other things. More flexibility for content is a must.”

Hesseldahl suggests, “Apple should give programmers the software developers’ kit they need to make the device more flexible and useful. Buy the box, and you can buy or rent from iTunes—and if that’s not enough, there are hundreds of easy-to-install apps that will let you watch whatever you want from the Internet… That formula may be lurking inside the mind of an as yet unheard of software developer who’s envisioned an application that will blow all our minds and make our TVs talk to the Internet in ways we can scarcely imagine. That person just needs a supportive partner to provide the hardware. There is no reason in my mind why that partner can’t be Apple. It’s time to get serious about this hobby.”

Full article here.

[Thanks to MacDailyNews Readers “Judge Bork” and “JES42” for the heads up.]