Yesterday, during D 2007, Steve Jobs talked briefly about Apple TV. He described it as a “hobby” more than a real business, an exploration of a new space–a set top box for the Internet. Apple TV (like Joost) is trying to find a business model that supports Internet-sourced content.

We’re still waiting for high definition iTunes movies and TV shows, content that Jobs hinted might soon appear to take advantage of the newly announced $399 160 GB Apple TV units. (Current Apple TV units have 40 GB hard drives.) And we’ll soon be seeing h.264 YouTube content directly on Apple TV.

The part of Jobs’ interview that really caught my ears wasn’t directly about Apple TV but rather about OS X on the iPhone. Apple TV, as you might be aware, runs a very stripped down, compact version of OS X that occupies just a few hundred MB. It sounds like the iPhone is going to take that approach even further, stripping down smaller and adding the multi-touch UI. In some ways, you might say that Apple TV has acted as the pilot program for iPhone technology.

As for third party iPhone applications, Jobs talked about the iPhone UI limitations: no mice, no pull-down menus and so forth, the “very different UI on the phone”. To me, this was a hedge. Apple TV has a “very different” UI as well and it runs OS X applications very nicely, thank you. On the other hand, if you’re in a two year $80/month data contract, I think people will be far less likely to disembowel their iPhones quite so readily as they currently do their Apple TVs to gain access to the underlying OS.