This is EXACTLY what has been previously announced.

Why are so many people shocked by this lol?

The Xi3 Pistion is not an Steam Machine or the rumored Steambox.

http://www.ign.com/wikis/steam/Xi3_Piston

It is exactly a Steam Machine. What OS do you think it runs?

Maybe something to do with preloaded drivers? Don't know.

Windows. http://kotaku.com/5990254/piston-makers-we-were-asked-to-build-a-product-specifically-for-valve

"Contrary to Valve's vision, Xi3 believes that the way to take this to market today is to do so with a Windows OS at the core"

This is why it isn't a Steam Machine. It was going to be, but Xi3 backed out. It does give an insight into what the Steam Machines will actually be like though.

It's a very solid idea, and certainly bound to be better/more successful than the joke that is Ouya.

But people thinking the "Steambox" is going to take over the home console market are sadly way off base.

Systems like OUYA, which are Android based, and Steam Machines, are going to be battling it out for this marketspace.  And this marketspace definitely has a chance to run into the space of the ONE and PS4... and also the PC market for that matter.

As far as the OUYA goes, it does the job for me, for the most part.  Of course I am retro gaming here.

*sigh* There is no waste of ressources so that you can use lower powered systems for gettint the same performance. Especially not the *size* of the os...

Your opinion doesn't equate to market reality or everybody else.

PC gaming is also not a niche market only for enthusiasts, one of the best selling franchises (The Sims) has 150 million copies sold, Diablo 3 PC has outsold the console versions, Minecraft has outsold the console versions, there are 50+ million people who use Steam, 30+ million who use Origin, 10's of million of people a day play League of Legends and Dota 2.
The PC gaming Market is also 20 Billion bucks large, the Xbox 360 and Playstation 3 combined is 15.5 Billion bucks.

The SteamOS has the potential to be stupidly massive, if and I must stress the if... The hardware manufacturers get behind it.

Imagine every device you own and they all have one thing in common: SteamOS.
You could then have a singular powerfull Desktop that does all the rendering of your games at superior levels of image quality than any other platform could possibly hope to achieve and stream it to any device in your home.
The potential there is stupidly massive, if a phone manufacturer decides to include SteamOS? then your phone could have the power of a Desktop PC (Like mine!) in a device that fits into your hand, playing games with better image quality than the next generation, current generation, previous generation and even the generation before that consoles combined rendering power.

The advantage of this approach is... You don't need a powerfull or expensive console, phone or tablet for improvements in graphics fidelity for your games.
Heck, you could mod an Origional Xbox, potentially throw SteamOS on it and play games with better image quality than the Playstation 4, that's the kind of potential that SteamOS can bring to the gaming market.
Could you imagine never having to need to buy another Console again? Or a better Tablet to keep up with new games?

Whether Valve will be successfull or not still remains to be seen, but it certainly has the potential to completely change the entire gaming industry.

They have been. by default, going to Android as a solution.  So now, they have an alternative.  I believe a range of manufacturers will get behind it, because it is a cheaper solution than Windows.  My concern has been whether or not major development studios will line up behind it, and produce the same content, and do exclusives.  I can see Valve doing what it can, making its IP exclusive to SteamOS in regards to consoles, which will help.