According to a rumor from Wired, the network DVR prototype TiVo showed off at CES is much more than a dream, and could be a big part of its future. The unnamed internal sources claim TiVo laid off 5 employees that make up most of its hardware team (which just celebrated its four Emmy awards), leaving just two engineers to handle support for its current devices, and those yet to come from third parties. We contacted TiVo and received the same response as Wired (available in full after the break), saying it's going to "allocate resources where strategic growth opportunities exist...we expect growth in the cloud-based delivery aspects of TiVo's business."

TiVo has talked up the possibility of delivering a cloud-based DVR experience since last fall. After releasing the highly-regarded Roamio line, it's possible the company feels there's little growth left in set-top box DVRs, especially considering the current state of FCC regulations and CableCARD. Microsoft's Media Center project appears to be over, and very few new third-party devices have shipped recently. We pinged investor Sam Biller for ideas on what other plans TiVo might have, and he pointed to a lack of detailed forecasts for the company's nearly $1 billion in cash, seeing the possibility it could acquire another company to build hardware. Whatever TiVo does from here, it's finally delivered on the promise of a capable do-it-all box with the Roamio -- hopefully that essence remains in future products.

Update: In a phone conversation, VP of PR Steve Wymer told us the company remains "fully committed" to Roamio, and called it the crown jewel of TiVo. In his view, it's not accurate to say that TiVo is exiting the hardware business as it continues to expand current products and plan future ones, but that it is reallocating resources with an eye towards the future -- a future that hopefully includes both the sweet nDVR prototype, and even better set-top boxes for those that want or already have them.

TiVo:

We continue to balance appropriate levels of staffing and expertise necessary to support our existing hardware business and continue our innovation in hardware platforms and accessories with the need to allocate resources where strategic growth opportunities exist - and there is no doubt that we expect growth in the cloud-based delivery aspects of TiVo's business.

Yahoo search gets safer with automatic encryption