Obviously the first question was what to use as the base system. Having used Windows for over ten years the first place I started looking was Windows PCs but I rapidly became disillusioned due to the price I'd need to pay for a reasonably quiet system. In addition, I've had all the usual issues with Windows being a little temperamental, slow to start up and coming with a pretty high overhead if you want it connected to the net.
It was all starting to look pretty expensive and not as easy as standard consumer electronics (i.e. robust and easy to use) so that I could get a sufficient SAF (spouse approval factor). Then a friend of mine introduced me to the Apple Mac Mini.
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In the end I decided to up-spec it a little as I was worried the basic 512Mb of RAM might not be sufficient (and you can never have too much RAM can you) [BTW a recent upgrade now gives the £399 model 1Gb of RAM] and the DVD burner (as the base model only comes with a DVD reader).
The machine plugs straight into the PC input on my LCD TV and auto detected the native panel resolution thus giving a pretty nice picture.
So what about media centre software? Well Apple bundles their own Front Row software and remote with the machine so no extra needed there. Front Row allows you to access your music library (from your iTunes library), play DVDs, stored video and photo slideshows (from iPhoto - also bundled).
So it's relatively inexpensive and does most of what I want - what about the downsides? Well, the Mini is pretty much self contained with no easy way to open it up and modify it or expand it within the box. It does, however, have four USB ports and a Firewire port on the rear. But it doesn't have a TV tuner built in.
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So a pretty good start - next getting a TV tuner.
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