From Panic blog:
"There’s a lot more going on in this adapter than we expected: indeed, we think the Lightning Digital AV Adapter outputs video by using AirPlay (or similar MPEG streaming). Are we off base? Let us know!
There are a lot of questions. What OS does it boot? @jmreid thinks the adapter copies over a “mini iOS” (!) from the device and boots it in a few seconds every time it’s connected, which would explain the fairly lengthy startup time for video out. Why do this crazy thing at all? All we can figure is that the small number of Lightning pins prevented them from doing raw HDMI period, and the elegance of the adapter trumped the need for traditional video out, so someone had to think seriously out of the box. Or maybe they want get as much functionality out of the iPad as possible to reduce cost and complexity. UPDATE: Another floated theory: efficient HDCP enforcement.
The bad news? By streaming internally, the quality is poor, and it’s not 1080p. We long for raw, untouched HDMI-out.
The good news? If someone complains that this insignificant plug costs $50, tell them it’s a tiny computer!"
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