Valve has created a PC-based game console that lives under your TV. The Steam Machine takes everything that’s great about the Steam Deck and adds the raw power to compete with the latest PlayStation and Xbox consoles. It also puts a huge amount of pressure on Microsoft to perfect its Windows and Xbox combination, as the Steam Machine brings Windows games to the living room in a way that Microsoft is dreaming up for its next-gen devices.
The Steam Machine looks like an Xbox Series X that has been cut in half into a miniature box. The 6-inch cube runs Windows PC games through Valve’s Linux-based SteamOS, and it should have enough power through its two AMD chips to deliver performance that’s close to an Xbox Series X or PS5. Inside, the Steam Machine’s components have all been compacted in a similar way to the Xbox Series X.
Beyond the hardware, it’s really SteamOS that makes the Steam Machine a viable Xbox and PS5 competitor. Valve failed to make Steam Machines a reality a decade ago, largely because developers had to port their games to Linux for them to run. Valve’s new Steam Machine utilizes its excellent Proton compatibility layer, which allows most Windows PC games to run seamlessly on the Steam Deck and often better than they do on equivalent Windows handhelds.
While the Steam Machine is a single device and Valve hasn’t announced OEM plans right now, I still think it represents a big threat to Microsoft’s next-gen Xbox plans — and even potentially to Windows PC gaming.
It’s no secret that Microsoft is working to combine the best bits of Xbox and Windows for its next-gen consoles, and that means more PC-like hardware and software, just like the Steam Machine. Asus’ Xbox Ally handhelds are an early look at the direction Microsoft is heading in for Xbox consoles, with Windows at the heart and an Xbox UI on top.
Microsoft’s combination of Windows and Xbox feels like a beta right now, though, and one that is shipping on a $1,000 device. Microsoft has effectively made the Xbox PC app into Steam’s Big Picture Mode and suppressed some of the annoying parts of Windows so they’re hidden away. It’s very early days for Microsoft’s vision here, and I personally feel it shipped far too early. The Windows and Xbox teams have a lot of work ahead to improve the Xbox full screen experience and hide the complexity of Windows away. Valve’s Steam Machine now heaps on the pressure for Microsoft to execute its vision perfectly.
That pressure will only increase if Valve can convince other PC OEMs to build Steam Machines in the future, just like it expanded SteamOS to Windows handhelds. While Microsoft is working on its own next-gen Xbox hardware, sources tell me it also wants OEMs to build future Xbox-branded hardware just like Asus has with the Xbox Ally. That puts Microsoft and Valve on an even bigger collision course.
Microsoft and Valve are both trying to attract similar audiences, gamers that are intrigued by PC gaming but want a simplified console-like experience, or those who are already PC gamers and want a reliable living room option that plays all the games they’ve already purchased.
The challenge for Microsoft is that Valve has already perfected SteamOS into a controller-friendly operating system, with a storefront that dominates PC gaming. All the pieces are ready to go for a Steam console, while Microsoft is building out its next-gen Xbox with a combination of Windows and Xbox and without being locked to a single store. The next Xbox now looks set to embrace rival stores like Steam to entice people in, but Microsoft still faces a massive hurdle of convincing people to actually buy games in its own PC store instead of just buying them on Steam.
Microsoft will undoubtedly lean on its impressive Xbox cloud saves and Xbox Play Anywhere support as parts of its strength to battle Valve’s Steam Machine, but with SteamOS now available across consoles and handhelds it diminishes Microsoft’s cross-device effort. PC Game Pass is still exclusive to Windows, though, so Microsoft’s subscription service will play a big role in helping its next-gen hardware stand apart. Microsoft also has the huge advantage of games like Fortnite, Valorant, Battlefield 6, and other multiplayer titles working seamlessly on Xbox, whereas they don’t run on SteamOS due to their complex anti-cheat systems.
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