I don't think it will set the world on fire. It's a nice thought and in the same arena as the Ouya looks nice on paper but has a lot of possible problems in it execution.

That is another point. If they develop their exclusives for it, they will lose quite a bit of revenue. They won't stop making HalfLife for the PC, that is for sure. But even cutting the Xbox 360 / PS3 version would mean 50% less revenue. Gabe even said that Left 4 Dead did better on consoles (360) than on PC, Portal made more money on PC though.

More or less what i was going to say.

I imagine it's just supposed to be a media PC for those interested but too lazy to hook up a Media PC.

Sort of like the Ouya.... but in a different way.

Bear in mind that we know almost nothing about the hardware, the software, the subscription terms, the business model.

A few ideas on what a steambox could offer to me, the customer, more than a standard gaming PC:

1) Better value on the hardware

Valve gains from keeping control of the software distribution, thus they can subsidize on the hardware, offering a better performance/cost ratio

2) Much better QA

Valve can pressure developers and publishers into testing and optimizing for a handful of steambox models, much more so than for the average prebuilt gaming rig, to say nothing of endless self-assembled combinations of CPUs, hard disks, GPUs, sound cards, driver infrastructure, firewall and secutiry middleware, OS versions...

3) Focused support

Again, because the hardware only comes in very small variety of configurations and the box is ofcused on a  handful of tasks, I expect issues to be easily to research and resolve. No more forum hunting for my compination of hardware and software to diagnose my troubles.

4) _Potentially_ wider gamut of software

Windows 8 is only paving the way towards a more closed, Microsoft-controlled ecosystem. If the windows store becomes a bad solutions for some developers (for economic, deployment, censorship or whatever reasons) then the steambox can potentially become one of the ways for indipendent, smaller, oddball developers to put their software out anyway. This of course is highly speculative, because it depends on so many choices by both MS and Valve.

5) A media box, and not an eye-sore in the living room

The very same box could be a very good media hub (without the dependance on MS' choices regarding content distribution, physical media, DRM) that I wouldn't be ashamed to leave next or under my TV.

and last but not least:

6) no hassle to research, build and maintain the box. A turnkey solution to play PC games at PC resolutions in PC genres, with PC input devices.

As for the troubles:

It runs Linux - the fact that the OS is Linux is basically a technical detail.Nowadays most development is high-level and multi platform anyway. Implementing a Valve-Linux channel of production is much easier than implementing a console one. New engines are surely not a trouble and old games can be wrapped in compatibility layers (virtual DOS for things out of GoG, an optimized WINE for the rest).

It can't be upgraded - we don't know yet _how much_ this is true. I'm pretty sure you'll be able to swap your HD, for example, but probably not change the soundcard or GPU. Frankly, I don't care. If the box is cheap enough (see point 1) and it is well supported for a few years (see points 2 and 3) I might actually like more the idea of migrating from steambox 2013 to steambox 2016 without caring about the hardware/software upgrading threadmill for three years.

It won't run my favourite games - this depends of what will happen of the Windows store politics, and of the relationship Valve can estabilish with publishers and developers. What if Valve ports most of the Steam catalog and strikes deals with Humble Bundle, Good old Games and Blizzard? What if they start selling - as a service - optimized WINE profiles to run a catalog of beloved Window games on the steambox, even from your old physical media.

Once again, we don't know enough yet. But people dissed the very _idea_ of Steam back in 2004, and we know how that turned out.

now first of all we should have to know how much of the steambox valve has to sell to make it a success. who said it has to sell as much as the other consoles, maybe 5 million or even less would be enough? if it can run the steam games you can play on your pc i don't really see the problem for valve.

I presume its a PC. Valve's bread and butter is Steam. More people with gaming PCs means a bigger market for Steam.

"Why not just connect your PC to the TV." This is silly. Obviously not everyone has a gaming PC. A lot of people don't  have machines worth upgrading or even want to bother upgrading their machines.

The reason people go with consoles is simplicity. They're relatively cheap boxes you connect to your television and that's it. Pop in a disc and enjoy some high end gaming.

Steam could potentialy fill a gap in PC gaming. The PC market needs low cost gaming PCs you can pick up at a retail store. If the Steam Box is not cheap then it won't appeal to consumers. Price is key.

This will be good for Microsoft as well. If its a PC this is a good opportunity to get more Windows 8 users.

No, PCs do NOT offer that. You have to spend hours researching, you have to accept overpriced and underspecced shit from OEMs or waste time building yourself, you have to worry whether the thing will play the games you want at the resolution/settings you want (why do we get so many computer help threads, if it's so easy?) and there can be subtle incompatibilities between components and with software that people do not want to take the time to figure out.

Consoles avert this problem but we are talking about currently PC-only games here.

You can still use a keyboard with the TV. But I think people want to play the GAMES, not the CONTROL METHOD, and therefore any way that simplifies bringing those titles to people will sell well. That includes console ports, IF console had the social and update features people like from Steam (which they won't), or this kind of thing. 

I also think people will buy the Steambox and connect it to a PC monitor. They value buying convenience but they won't conform to Valve's idea of how the product is used.

Current PCs are only easy for the most knowledgable users, and current consoles lack Steam's library and its most used features. Valve can fix either problem to make money.

It will not put much of a dent in the console market.

However, fail is relative to their expectations, I doubt they expect a console with half-life 2, and world of goo :P or something like that to compete.

Nor is it expensive to design, it's a HTPC with linux, I could design it by myself. But, it won't put a dent vs 360, ps3. But you could also ask what's the point? It's going to have to be $99 dollars or less or Else I just don't see anyone buying this instead of a say a xbox 360.

If they want this this thing to sell... Linux probably isn't the way to go.

Going with Linux means they'll need A LOT of support.

Whatever... if I can plop down a Kickstarter for Ouya then I will certainly plop down for a Steambox