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When the hard drive died on my MacBook recently, I found out first-hand just how easy and effective Time Machine — the backup feature in the latest version of Mac OS X — can be. With the new drive and a basic installation of Leopard in place, I was able to plug in my external backup drive and, with a minimum of mouse clicks, I was back in business in no time.

What could be simpler? Well, how about using a backup drive you don’t even have to plug into the computer?

That’s the concept behind Time Capsule, a new Apple product that puts a 500-gigabyte ($299) or 1-terabyte hard drive ($499) inside an 802.11n wireless router. It is the least hands-on backup system you can imagine. Once Time Capsule has been designated as the your Mac’s backup drive, your computer only has to connect to your home network to do Time Machine’s hourly backups.

In other words, I can be sitting in my living room and surfing the Web while watching Lost, and my MacBook is being backed up to the Time Capsule drive in my home office via Wi-Fi. I can soak in the mysteries of the island without worrying about the mysteries of backing up my data.

Which is not to say that Time Capsule is perfection. I had some minor bumps in getting it set up.

As with Apple’s AirPort Extreme routers, it requires special software to handle the configuration — there’s no built-in, Web-based setup screen, as is the case with almost every other wireless router on the market. The AirPort Utility that comes with Leopard won’t work with Time Capsule, so you must install an updated version available only on the included CD. (There’s also a version of the utility for Windows PCs on the CD.)

The software found settings on my iMac related to having connected it wirelessly to my existing home network and asked to apply them. I said yes, but for some reason I kept getting kicked back to the setup start screen. I wound up having to use the AirPort Utility’s manual configuration.

To test its backup feature, I used a new MacBook Pro review unit. Time Machine makes a complete backup of a computer’s hard drive when it’s initially set up, and this can take a while. It took about three hours to back up the 16 GB on the notebook, and that included an interruption when I decided to change settings on the router and it restarted, aborting the backup process. It took Time Machine quite a while to figure out where to resume the backup, and its progress bar became confused, showing the amount of data transferred in kilo- rather than megabytes. I was worried at that point it was going to take days!

However, once the process was complete, the backup was fine, and Time Machine continued to back up to Time Capsule on the hour.

Of course, you don’t have to use the drive in Time Capsule with Time Machine for backups. You could use it strictly for data storage, making Time Capsule a home server. And the drive is visible to Windows PCs on your network, so its usefulness isn’t limited to Macs.

The router, by the way, has great range, as do all 802.11n-based AirPort Extremes. I get an excellent signal on the ground floor of my three-story townhome, with the router up on the third floor. It also has Gigabit Ethernet hardwire ports, though only three of them — most routers have four Ethernet connections. It’s also got a USB 2.0 port, so you can connect a printer or another external drive.

Overall, this is an excellent, smartly designed product, and — surprisingly for Apple — a pretty decent value.

Apple’s AirPort Extreme router sells for $179, and 500-GB external hard drives run between $100-$150. That makes the $299 model a decent deal — particularly since this is the only way to use Time Machine in a wireless scenario.

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