Boxee’s Cloud DVR service uses the company’s set-top box to upload live TV recordings to the cloud, which can then be streamed back to the Boxee device as well as to computers and mobile devices. The company offers its users unlimited storage for recorded shows, and is eventually going to charge $10 a month for that service once the company concludes its beta test later this year. A free limited tier will come with five hours of playback time per month.

The initial focus of Boxee’s cloud DVR is over-the-air TV, which can be received for free with an antenna — and that was apparently one of the reasons the rollout in the Bay Area took so long. Boxee VP of Marketing Andrew Kippen told me that the company already has a lot of users of its device in the Bay Area, but that it was cautious about rolling out the service because of the area’s unique geography. Via email, he told me:

“We were worried about San Francisco’s numerous hills to begin with, which is why it wasn’t one of our first 8 markets, but now feel like we have enough users there to know the product works well.”

Boxee’s expansion to the Bay Area means that the company’s DVR service is now available in a total of nine markets, including New York, Los Angeles and Chicago. Kippen told me that the company wants to be in 26 U.S. markets by the end of the year.

Boxee first introduced its cloud DVR service and device in November, and at the time still called the set-top box “Boxee TV.” However, the device was rebranded earlier this month to Cloud DVR to put a bigger emphasis on its DVR capabilities. Renaming the device just a few months after launch could be seen as a sign that Boxee is struggling to explain the offering to consumers, many of which aren’t even aware that they can receive HD TV programming over the air.

But the rebranding also suggests that Boxee is looking to work more closely with operators. The company notably toned down its cord cutting rhetoric with the relaunch, and the Boxee Cloud DVR became the first device of its class to support Comcast’s encrypted basic cable feeds. The cable operator started encrypting basic cable in some markets this month, and reached an agreement with Boxee to give the Cloud DVR access to these feeds last year.

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DLNA will enable Boxee TV owners to play files stored on their computers or network-attached storage drives, a feature that was at the core of Boxee’s original Boxee Box. Boxee TV also functions as a DLNA digital media renderer, meaning that users can beam music and videos straight from their mobile device to their Boxee TV, much in the same way as one would stream a video via Airplay to an Apple TV.

Boxee TV combines apps for online media services like Netflix, YouTube and Spotify with live over-the-air television and a cloud DVR that offers unlimited storage for recorded shows.

Cloud DVR functionality is currently just available in a limited number of markets, and it looks like Boxee was trying to iron out some bugs and add some much-needed features before rolling it out further. One example: Boxee TV users can now schedule recordings directly on the device. Previously, users had to go to Boxee’s cloud DVR website to schedule a recording – a step that seemed overly complicated for a pretty basic feature of a DVR.

Check out my Boxee TV unboxing video below:

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The basics: What is Boxee TV

Boxee TV is Boxee’s second major hardware initiative, and it’s a very different device than the Boxee Box that went on sale two years ago. The Box came with all kinds of bells and whistles to combine local and internet content, including a full Flash-enabled web browser and hundreds of apps. Boxee TV on the other hand concentrates on a few essential apps, which at launch include Netflix, Vudu, YouTube, Vimeo, Spotify, Pandora and MLB.

Boxee is offering its “No Limits” cloud DVR with unlimited storage space for $9.99 a month. The company will also introduce a limited, free DVR tier.

Boxee instead promises to provide a lot of content through over-the-air television – the broadcast feeds of networks like NBC, ABC and CBS which can be accessed in HD with an antenna. The device offers access to live over-the-air TV through a built-in dual tuner, and Boxee is launching a cloud DVR service to give users unlimited recording space for their favorite shows. This “No Limits DVR” was initially announced as a $14.99 per month subscription, but Boxee announced Thursday that it will instead make it available for $9.99 a month. The company also announced that consumers who buy the box will get a three-month Netflix credit, regardless of whether they’re new or existing Netflix customers.

The exterior: Boxee TV unboxing

With the original Boxee Box, Boxee put a of of emphasis on unique industrial design: The device itself was shaped like a cube that looked like it was sinking into whatever surface it was standing on, and the packaging was very Apple-like. The new Boxee TV is a much simpler device, and that also translates to a more mass-market oriented, somewhat busy packaging. Check out my unboxing video, or continue reading below for some first impressions.

The goodies: My first few hours with Boxee TV

I just had a few hours to play with Boxee TV Wednesday, but it was enough to get some first impressions of the device itself, some of its core features, and some of the apps that come with it:

Much of the Boxee TV setup happens on the second screen.

The setup: Existing Boxee users need to register for a new account to use Boxee TV, but the whole registration and setup process is impressively fast. Once your unit is connected to your TV, an included indoor antenna and the Internet, you’re asked to open a web browser on your laptop or mobile device to complete the registration process.

Boxee found 24 over-the-air channels for me. Upon further inspection, I found that it had concentrated on the better-known ones and that I could enable access to another 22 channels in the settings.

The web-based setup didn’t feel very long at all – and once I looked up from my laptop, Boxee TV was already done with the channel scanning, offering me access to 24 broadcast channels, including ABC, NBC, CBS and FOX.

Live TV: Live TV starts playing as soon as you turn on your Boxee TV, and it keeps playing in the background even while you navigate the programming guide.

The live TV experience overall is pretty neat; changing the channels comes with a just barely notable delay, and once you tune into a new show, the device immediately displays the show’s title, episode number and a progress indicator that tells you how much you missed.

Boxee’s TV guide doesn’t look like your cable guide at all.

Pressing left or right on your remote’s D-Pad opens up a horizontal programming guide that shows what’s on right now. Press the home button, and you can also see what’s coming up in the next two hours. There is no cable guide-like grid guide, so you won’t be able to see what’s on tomorrow at 7 p.m. Boxee’s thinking seems to be that you’re only interested in what’s on right now if you want to watch live TV, and that you should schedule your recordings of upcoming shows on the second screen. Speaking of which:

The No Limits DVR: Boxee’s cloud DVR will only be available in some major cities at launch, and the Bay Area is unfortunately not part of that initial roll-out. However, pure luck would have it that the company was doing some limited testing of DVR functionality in the Bay Area Wednesday, and I was able to at least test it for a little while.

Boxee TV only lets you schedule recordings on the web, and the service isn’t available everywhere yet. I got lucky and stumbled across a limited test in the Bay Area, which is why you only see two channels.

Recordings can only be scheduled on the web – Boxee is going to roll out dedicated apps in the future – but the website worked fine for that purpose and was actually pretty snappy. However, I found it somewhat irritating that I couldn’t just start a recording on the device itself once I stumbled across something interesting.

The recording process did work fine, despite my limited residential upload capacity, and I was able to stream a recorded episode both to the Boxee TV device as well as my latop.

Boxee TV’s YouTube app is the same app that recently rolled out on the PS3 – and it’s the slickest implementation of YouTube on TV devices out there.

The apps: The apps line-up available on Boxee TV is fairly standard, with a few notable exceptions: The YouTube app on the device is essentially the same as the one that recently rolled out on the PS3, and I gotta say it’s beautiful. Easily the best YouTube implementation currently out there, and miles ahead of the classic Leanback-style YouTube app on the original Boxee Box. Also worth noting is that Boxee TV once again features a Spotify app – Spotify has been slow to get onto connected devices, and isn’t available on competitors like Apple TV (a aapl) or Roku yet. And finally, Boxee TV also comes with a Cloudee app, offering access to Boxee’s very own cloud storage service for personal media.

Local media. One of the core strengths of the Boxee Box has been its support for local media. Boxee TV doesn’t put much emphasis on this. The only way to play local files is to physically plug in a USB or hard drive; you can’t access any network-attached storage drives. Boxee has said that it wants to support DLNA in the future, which would make it possible to beam content from your tablet or mobile phone to the device, but that feature isn’t available at launch. I connected a hard drive to the device to test various file formats, and the experience was inconsistent. Boxee TV had no problem playing back MP4s and other more common file formats, but the playback of a ripped DVD was sub-optimal, and some media, including even some DivX files, didn’t play at all.

The verdict: My thoughts so far

I’m a fan of over-the-air TV – and a like the simplicity of the Boxee TV UI.

I’ve been a longtime proponent of over-the-air TV, and often tell people who are interested in ditching cable that they should buy an antenna first. As such, I was immediately intrigued when I heard about Boxee’s plans to launch a device with a bottomless cloud DVR. However, their announcement of a $15 monthly subscription plan caused a bit of sticker-shock for me. $15 just is a lot of money, especially if you also pay for a Netflix subscription, and possibly some VOD content as well. At some point, you might as well subscribe to cable again.

Boxee’s decision to instead go with a $10 plan makes a lot more sense, and personally makes the service more attractive to me. And the device itself seems pretty intriguing as well, even just after a few hours of testing. I like the simplicity of it, and it offers access to most of the apps that I regularly use – with Hulu Plus being one of the few exceptions. I’d definitely miss access to local files if I were to trade the old Boxee Box against a Boxee TV – but I may have a feeling that I’ll just keep both around if Boxee TV’s cloud DVR delivers what it promises.

Stay tuned for a more detailed test of Boxee TV in the coming days. In the mean time, feel free to check out my ebook Cut the Cord: All You Need to Know to Drop Cable for more information about over-the-air television and streaming devices.

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Boxee TV is Boxee’s second major hardware initiative after the introduction of its original Boxee Box two years ago. The new device, which was introduced earlier this month, comes with a few apps for services like Netflix, Pandora as well as the Walmart-owned Vudu video-on-demand service, and combines those with free over-the-air content that is being accessed via a built-in dual tuner.

Owners of the device will also be able to use it as a DVR, with a twist: Recordings aren’t stored locally, but uploaded to a cloud service that promises unlimited storage. This “No Limits DVR” service will cost consumers $15 per month, and will initially only be available in New York City, Los Angeles, Chicago, Dallas, Houston, Atlanta, Philadelphia and D.C. Boxee has said that it wants to expand the service to additional markets in 2013.

Boxee TV is significantly cheaper than the original Boxee Box, which initially sold for a whopping $250 $199. This is in part because Boxee TV isn’t based on an Intel CPU, as it was the case with the Boxee Box. The new device instead uses the Broadcom BCM7231 chipset, which is significantly cheaper. One downside is that the new Boxee TV device will support slightly fewer codecs for local media playback than the original Boxee Box.

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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 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  and mobile phones. Native apps for Android 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, Vimeo and Pandora. 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 chipset; Boxee TV uses a CPU from Broadcom.

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 Simple.tv launched its DVR for cord cutters earlier this week.

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• How consumer media will change in 2013
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