Here comes Boxee TV: A $99 box with over-the-air TV and cloud DVR

Boxee plans to announce a new device dubbed Boxee TV Tuesday that aims to combine over-the-air broadcast content with a cloud DVR and streaming services like Netflix (s NFLX) and Vudu (s WMT). Boxee TV will allow consumers to record two shows at a time, and upload each and every recording to the cloud, where it will offer unlimited storage for recorded shows. The new product is a big step for Boxee, whose Boxee Box device never managed to attract an audience beyond early adopters. “This is no longer for geeks by geeks,” Boxee CEO Avner Ronen told me during a recent phone conversation.

Boxee’s new UI focuses squarely on TV content.

Boxee TV will go on sale for $99 on November 1. The cloud DVR service will cost consumers an additional $15, which is only slightly cheaper than a month-to-month TiVo (s TIVO) subscription, but Boxee hopes to make up for it with added features. Recordings stored in the cloud will be available for streaming both on Boxee TV as well as on any device with a web browser, including iPads (s AAPL) and mobile phones. Native apps for Android (S GOOG) and iOS will launch at a later time, said Ronen.

Boxee will roll out the DVR service in New York City, Los Angeles, Chicago, Dallas, Houston, Atlanta, Philadelphia and D.C first, with Ronen telling me that the company wants to make sure that the cloud DVR infrastructure can scale up to the challenge. A launch in additional markets is planed for 2013.

The new Boxee TV device will come with a limited number of apps, which will include Netflix, Vudu, YouTube, (S GOOG) Vimeo and Pandora. (s P) However, many of the apps available on the existing Boxee Box won’t make it onto the new device. “We don’t believe that the user experience gets better with a thousand apps,” Ronen told me.

Boxee TV will come with a limited number of apps.

Boxee TV is being manufactured by D-Link, which also made the original Boxee Box. But aside from that, there are few differences between the two products. The Boxee Box looked like a futuristic cube; Boxee TV uses a much more standardized — and thus stackable — form factor. The Boxee Box emphasized social discovery and artsy Vimeo videos while Boxee TV focuses squarely on TV shows, with TV programming running in the background as soon as you turn on the device. The Boxee Box was based on an Intel (S INTC) chipset; Boxee TV uses a CPU from Broadcom. (S BC)

Boxee also completely rebuilt its software from the ground up, ditching the code base of the XBMC open source project and replacing it with a customized embedded Linux solution. “It was very liberating for us,” Ronen said about this step.

The introduction of the new device means that Boxee will put the original Boxee Box in maintenance mode, with Ronen telling me that the company won’t be rolling out any major firmware updates for it anymore. That likely won’t go over well with Boxee’s small but very vocal base of early adopters.

Boxee TV will offer unlimited recording space in the cloud.

Ronen said that the company will soon announce a kind of loyalty offer for existing users who are willing to switch over to the new platform, but he also didn’t make a secret out of the fact that Boxee TV is meant to target a different and potentially much larger user base. “When you start a company, you want to solve a problem for yourself,” said Ronen. Now, Boxee was out to solve a problem for mainstream consumers ready to cut the cord, and generate revenue for the first time in its history, he added.

Boxee’s cloud DVR subscription service comes at a time when there’s a bit of a comeback for over-the-air, in part because consumers have been running into restrictions with some over-the-top content. Shows like American idol still aren’t available as full episodes online, but can be viewed for free and in HD via over-the-air broadcast feeds. A number of companies is looking to capitalize on those feeds and combine them with streaming and online apps. New York-based Aereo has been sued for its offering, and launched its DVR for cord cutters earlier this week.