Valve has created a PC-based gaming console that lives under your TV. Steam engine takes the best of the Steam Deck and adds incredible power to compete with the latest PlayStation and Xbox consoles. It also puts enormous pressure on Microsoft to improve its Windows and Xbox combination, as the Steam Machine brings Windows gaming into the living room in a way that Microsoft dreams of for its next-gen devices.
The Steam Machine looks like an Xbox Series X cut in half into a miniature box. The 6-inch cube runs Windows PC games via Valve's Linux-based SteamOS, and it should have enough power thanks to two AMD chips to deliver performance close to the Xbox Series X or PS5. Inside, all components of the Steam Machine are compressed in the same way as in the Xbox Series X.
Beyond the hardware, it's SteamOS that makes the Steam Machine a viable competitor to the Xbox and PS5. Valve failed to make Steam Machines a reality ten years ago, largely because developers had to port their games to Linux in order for them to work. Valve's new Steam Machine features an excellent level of Proton compatibility that allows most Windows PC games to run seamlessly on the Steam Deck, often better than comparable Windows portable devices.
While the Steam Machine is a single device and Valve has yet to announce any OEM plans, I still think it poses 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 on combine the best of Xbox and Windows for its next-gen consoles, which means more PC-like hardware and software like the Steam Machine. PDA Asus Xbox Ally is an early look at the direction Microsoft is heading in with its Xbox consoles, with Windows at the core and the Xbox user interface at the top.
However, Microsoft's Windows and Xbox combination now appears to be a beta version that ships on a $1,000 device. Microsoft has essentially turned the Xbox PC app into Steam's Big Picture Mode and suppressed some annoying parts of Windows so they are hidden. Microsoft's vision here is at a very early stage, and I personally think it's being implemented too early. The Windows and Xbox teams have a lot of work to do to improve Xbox's full-screen experience and hide the complexity of Windows. Valve's Steam Machine is now putting pressure on 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 as it brought SteamOS to Windows laptops. While Microsoft is working on its own next-gen Xbox hardware, sources tell me that it also wants OEMs to build future hardware under the Xbox brand, like Asus did with Xbox Ally. This puts Microsoft and Valve at even greater conflict.
Microsoft and Valve are trying to appeal to similar audiences: gamers who are intrigued by PC games but want a simplified console experience, or those who are already PC gamers and want a reliable living room option that can play all the games they already buy.
The challenge for Microsoft is that Valve has already turned SteamOS into a controller-friendly operating system with a storefront that dominates PC gaming. All components are ready to use on the Steam console, while Microsoft is developing the next generation Xbox, which combines Windows and Xbox and does not require any additional costs. tied to one store. The next Xbox now looks set to embrace rival stores like Steam to tempt people, but Microsoft still faces a huge hurdle in convincing people to buy games from its own PC store rather than just buying them on Steam.
Microsoft will undoubtedly lean on its impressive Xbox cloud saves and Xbox Play Anywhere support as part of its strength in the fight against Valve's Steam Machine, but now that SteamOS is available on consoles and handhelds, it reduces Microsoft's efforts to ensure cross-device compatibility. However, PC Game Pass is still a Windows exclusive, so Microsoft's subscription service will play a big role in highlighting the next-gen hardware. Microsoft also has a huge advantage in the form of games like Fortnite, Grade, Battlefield 6and other multiplayer games that work without problems on Xbox, but do not work on SteamOS due to complex anti-cheat systems.
Price will also be an important factor in the Xbox + Windows vs Steam Machine comparison. Valve hasn't yet determined pricing, but says the “Steam Machine is priced comparable to a PC with similar specs.” That sounds more expensive than a subsidized console at a time when Microsoft and Sony are raising console prices beyond the norm. Microsoft also hints that its next-gen Xbox will be “very premium, very high-quality curated gaming,” so expect those consoles to have PC-like pricing as well.
As the Steam Machine brings a simplified form of PC gaming into the living room, it also threatens to draw more attention to Windows' performance problems and the direction Microsoft is taking with its operating system. SteamOS already outperforms Windows in many games, which has led some gamers to look at Linux for the first time. Combined with the growing dislike of Microsoft's direction with Windows from the PC gaming community, Steam Machine should be a wake-up call for Microsoft to focus on productivity and gaming rather than shoving Copilot buttons everywhere.
The Steam Machine now looks like a timely response to Microsoft's decades-long struggle with Windows gaming, an effort that's been in the works for a long time. Valve initially attempted to put a box in everyone's living room with its “Steam Box” effort over a decade ago. I still remember how I encouraged my colleague TK Sottek to chase Gabe Newell at CES in 2013. Valve CEO sat down with us for a rare and extensive interview about the future of Steam and Steam Machines. Much of what Valve tried to do with the original Steam Box was a reaction to Windows 8, and Newell even described decision to launch Valve games on Linux as a “hedging strategy” against Microsoft. He also described Windows 8 as a “huge sadness” at the time, revealing that Valve was disappointed with Microsoft's direction regarding Windows more than a decade ago.
Valve's hedging strategy now looks like it could realize the dream of a living room PC that Microsoft has been chasing for decades, from Windows Media Center to the Xbox One's big push with Windows underneath. But in the living room it’s not Windows, but Linux.
You'd think this would be a wake-up call for Microsoft. Instead, Microsoft Gaming CEO Phil Spencer reacted positively to Valve's statement during a conversation with Xbox employees yesterday. He also published on X Congratulations to Valve.
“Expanding access across PC, consoles and handheld devices reflects a future rooted in choice, the core values that have defined Xbox's vision from the beginning,” Spencer said. “As one of Steam's largest publishers, we welcome new ways for players to access games everywhere.”
Microsoft is confident its path to the next Xbox devices is the right one, but it will now have to compete with Steam on its living room turf to make a PC-like gaming console a reality. The game has begun.
What's happening with the Windows Insider program?
In recent weeks, everyone behind Microsoft's Windows Insider program has announced that they are moving on. Brandon LeBlanc, Amanda LangowskiAnd Jason Howard all have moved into separate roles within Microsoft, and it is unclear who will replace them.
Microsoft assures me that “there are no changes to the Windows Insider program,” despite the trio suddenly switching roles at the same time. “While we hire to fill these positions, the Insider program will be led by Alec Oot, Core Team Product Manager, Windows Service and Delivery,” said Chris Morrissey, senior director of public affairs, Windows Service and Delivery. “We remain committed to listening and learning from our Insiders, continuing to publish regular blog posts as we develop new experiences each week.”
The current Windows Preview Build blog posts are untitled and I wonder if they will all be written by AI agents in the future. Blog posts about new Windows features seem like easy targets for Microsoft's internal AI push. Either way, I hope Microsoft continues to listen to Windows feedback through its Insider program, especially since it was introduced at the same time Windows 10 fixed Windows 8's bugs.
I'm always interested in hearing from readers, so please leave a comment here or you can contact me at [email protected] if you want to discuss anything else. If you have heard about any secret Microsoft project, you can contact me by email: [email protected] or talk to me privately on the Signal messaging app, where I'm Tomwarren.01. I'm also on Telegram if you prefer to chat there.
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