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Air Video is the best thing ever created. It works well for native iphone/ipad files but it also converts typical divx and MKV files on the fly. I just have problems streaming 720p MKV's, it hiccups all the time. I am streaming through an external drive through my mac mini, i wonder if it doesn't have enough processing power?
 
For 2.99 air video upgraded my 16g ipad to 96g (80 gig laptop)

Technically I could attach my 500g external drive or other computers too, totally worth it
 
When air video is converting the avi on iPad, does it take up any hard drive space.

It performs the conversion on the server, not the iPad.

You can also queue up files for 'offline' conversion (rather than on the fly) and then it'll convert them on the server and put the converted copy in the original folder. After that point, that file will have a green 'Converted' label. So far I've only done this as a test, though, live conversion has suited my purposes.
 
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