I imagine the Steambox to be a gaming console in all respects, but with a PC hardware architecture (x86) and a proprietary OS based on linux. Steam will be used to buy both games and apps to add functionalities to your system.
Using a PC architecture, it could be easily supported by all current PC/Steam developers, with the option to optimize the game a little bit if they want to.
As their main goal, they should deliver a good price/hardware compromise, this way those who are interested into a low to mid level gaming PC could opt to buy their console, while hi-end PC enthusiats (a minority) could still use standard Steam on their PCs.
Imo, if they don't screw up something, if they manage get a couple of good exclusives it could coexist with other consoles and even steal some marketshares.
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