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ZDNet UK has a Comdex 2001 preview and has this interseting quote:

Apple's i2DVDBox combines Internet, DVD, MP3, and even interactive television technologies, all in one device. The i2DVD Box offers all the same features as a conventional DVD, including digital Dolby and composite and s-video outputs. The digital outputs are both optical and coaxial for compatibility with other home entertainment devices.

A typo? or simply misinformation...