Valve is making a huge mistake with the Steam Machine

[Legend11]

It's going to fail and it's pretty easy to see why.

For starters unless the hardware manufactures get subsidies from Valve (which will obviously never happen) they'll have no incentive to sell hardware at a loss so you're going to see the Steam Machines going up against consoles with a price advantage.

The vast majority of the buying public won't even jump in until the systems reach $199-$249 and it's hard to imagine Steam Machines reaching that point anywhere close to when XB1/PS4/WiiU will. Microsoft could easily afford to lose $50-$100 per box to reach that point if there's a lot of market pressure for example (they'd get most if not all of it back in Live subscriptions and in game sales).

Digital only will cut off a large portion of the public that don't have the internet connection required to download games in the 20-50gig range.

The majority of PC core gamers likely already have a gaming PC so it's hard to believe they're going to abandon/sell such PCs to buy a Steam Machine and use a console controller over a keyboard and mouse. So you're going to be looking at a small subset that will want both a gaming PC and a Steam Machine.

It's likely that Valve won't put everything on the line and put the hundreds of millions of dollars in advertising, etc required to compete with Microsoft/Sony/Nintendo and instead leave that up to the hardware manufacturers and publishers. This will be extremely risky as it drives up the retail cost of Steam Machines and relies on publishers not favoring the competition if piracy becomes an issue.