After months of rumours, Apple yesterday announced the new Apple TV, a slimmed down device which will give users in Canada and the U.S. the ability to rent HD movies from the iTunes store. Users in the U.S. will also have the ability to rent select HD shows from ABC, Fox and BBC America.

Apple says the new device will also let U.S. users stream content from Netflix, YouTube, Flickr and MobileMe, as well as music, photos and videos from a Windows PC or Apple Mac.

New release HD Rentals will start at $4.99 in Canada and the U.S. while U.S. HD TV rentals will sell for 99 cents.

Features of the new Apple TV include an Apple A4 processor - the same processor inside the iPad and iPhone 4 - built-in HDMI, Wi-Fi, Ethernet and a tiny 6-watt universal power supply, all inside in an enclosure that’s about four inches square, some 80 percent smaller than the previous generation.

A new Aluminum Apple Remote lets users take control of the device.

Video formats supported include: H.264 video up to 720p, 30 frames per second, Main Profile level 3.1 with AAC-LC audio up to 160 Kbps per channel, 48kHz, stereo audio in .m4v, .mp4, and .mov file formats; MPEG-4 video, up to 2.5 Mbps, 640 by 480 pixels, 30 frames per second, Simple Profile with AAC-LC audio up to 160 Kbps, 48kHz, stereo audio in .m4v, .mp4, and .mov file formats and Motion JPEG (M-JPEG) up to 35 Mbps, 1280 by 720 pixels, 30 frames per second, audio in ulaw, PCM stereo audio in .avi file format.

Apple TV will be available later this month in the U.S. for $99 and in Canada for $119.

Discuss the new Apple TV in Digital Home's HTPC and Media Extender forum .