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Valve Steam Machine, SteamOS Desktop, Steam Frame VR and Steam Controller

LukeTbk said:
Not sure what steam care or gain by moving gamers out of windows ? A bit of a defensive move against consoles OS being better at playing games than windows I guess.

Moving them to SteamOS, where they have nice control, can push ads and their own store over the competition, that interesting of course.
Click to expand...
It's already been explained by Gabe Newell. They fear Microsoft for their incompetence and malice. Considering the video is from 2013, the failure of Windows 8 from Microsoft had worried Valve since they depend on Windows. Microsoft can simply release an update and break Steam, which could be deliberate. Remember when Windows Vista was released and Microsoft just killed off the hardware accelerated audio market? Valve also benefits from an open platform where on iOS and Android they'd be destroyed by Apple's App Store and Google's Play Store. Windows is open but Microsoft is actively trying to destroy this. Remember that Windows RT was not only Microsoft's attempt at ARM, but they also restricted software to only their store.

Valve doesn't fear consoles. Consoles fear Valve, but Valve fears Microsoft. Also remember that Sony stopped making their games for PC when Valve announced GabeCube. As much as people want to point out Switch 2's success, but the Steam Deck instantly sold out with a massive price increase. I have a feeling the same thing will happen with the GabeCube. It shouldn't, but it will.

View: https://youtu.be/yeCuasjxsWk?t=417
 
Aurelius said:
You can certainly prefer the Steam Machine
Click to expand...
You are missing all the points again & again.
Steam wants to sell more games - MARKET $HARE - they aren't trying to capture the PC / hardware market!

Yes, I prefer PC & have 500+ games on Steam - I am one segment of their target market.
Console / handheld gamers are another segment & non-gamers are another segment, etc.

They have had so much free PR it's astonishing. "There is no such thing as bad publicity"
~ "The only thing worse than being talked about is NOT being talked about."

Aurelius said:
Only the PS5 was released in 2020 while the Steam Machine is shipping next week. Paying $400-plus extra for a system that draws even with a six-year-old console
Click to expand...

People who already own a PS5 & have the money may want the Steam Box too because it is an entirely different MARKET of games & VR options.

Why do you want LESS choice vs MORE choice?

Bankie said:
No, you're not understanding. The goal is not hardware market share; the goal is to bring in more gamers to STEAM. The hardware does not matter as once the software is there the hardware vendors will follow.
Click to expand...

rinaldo00 said:
If you read the post I was replying to he specifically said MARKET SHARE in all caps.
Click to expand...
Soooo... MARKET SHARE in all caps - to you - means that I said Valve wants to take down Lenovo / DELL and corner the hardware market while you ignore the context was about selling more games?

rinaldo00 said:
Which they will not increase much because of the price. That is our point that you either do not understand or choose to ignore.
Click to expand...
I get your point - you think Valve sucks, you want them to fail & nobody will buy their POS GabeBox.
Steam will go out of business because they don't sell enough games to offset R&D costs & will never gain games sales Market Share because consoles are KING!
 
Last edited:
DukenukemX said:
It's already been explained by Gabe Newell. They fear Microsoft for their incompetence and malice. Considering the video is from 2013, the failure of Windows 8 from Microsoft had worried Valve since they depend on Windows. Microsoft can simply release an update and break Steam, which could be deliberate. Remember when Windows Vista was released and Microsoft just killed off the hardware accelerated audio market? Valve also benefits from an open platform where on iOS and Android they'd be destroyed by Apple's App Store and Google's Play Store. Windows is open but Microsoft is actively trying to destroy this. Remember that Windows RT was not only Microsoft's attempt at ARM, but they also restricted software to only their store.

Valve doesn't fear consoles. Consoles fear Valve, but Valve fears Microsoft. Also remember that Sony stopped making their games for PC when Valve announced GabeCube. As much as people want to point out Switch 2's success, but the Steam Deck instantly sold out with a massive price increase. I have a feeling the same thing will happen with the GabeCube. It shouldn't, but it will.

View: https://youtu.be/yeCuasjxsWk?t=417
Click to expand...

*current year* This is the year of Liinux!
 
usa all day said:
Soooo... MARKET SHARE in all caps - to you - means that I said Valve wants to take down Lenovo / DELL and corner the hardware market while you ignore the context was about selling more games?
Click to expand...

Not Lenovo/Dell but you have said the hardware market share of PS5 and Xbox.

usa all day said:
I get your point - you think Valve sucks, you want them to fail & nobody will buy their POS GabeBox.
Steam will go out of business because they don't sell enough games to offset R&D costs & will never gain games sales Market Share because consoles are KING!
Click to expand...
YES! Wow you figured out my secret agenda! I want Valve to fail and make my 2000 Steam games worthless!

You put words in every one's mouth just to make your point.

I will try again.

Steam already has so much market share of game sales people call them a monopoly.

If you are talking about game sales and not hardware then I agree with you but you change your mind so often that I can't keep up. In the past you have said that the Steam Machine will challenge the PS5 and Xbox for HARDWARE SALES. Like this post.

usa all day said:
LOL, okay... yeah, but I think I am HOPEFULLY optimistic for 10+ million sold over the next year - easily beating xbox & hitting 50% of PS5 annual sales.
Click to expand...

That will not happen with this Steam Machine at its current price. The Steam Machine price is too high to take away any hardware share from consoles.

I am saying that will never happen with this Steam Machine at its current price.
 
I asked Ai (Aggregator idiot) some questions about Valves GabeBox cost of R&D, MFG, BOM, GPM, P&L, NET and sales required to pay the GabeBox bill.

It's a bit of this then that back and forth as replies led me to new prompts, but I only spent 10 minutes jacking with it...

My basis was: 21 Years on STEAM // 627 Games // $5,800 total // $275 per year

Gaming has run hot & cold over 21 years with babies, kids, divorce, new job & constant travel, new GF, street bikes, dirt bikes, IRL racing and other stuff that interfered with gaming.

I'd love to hear what you guys think you spend per year on games alone (no hardware).

NOTE: The current average revenue per Steam user is approximately $19/month (~$230/year).

There is no publicly disclosed figure for the specific Research and Development (R&D) design cost of the new Steam Machine (2026). Valve is a private company and does not release detailed project-level financial reports.

However, industry analysis and comparable data provide the following context:

Estimated Development Scale
  • Console Industry Benchmarks: Developing a custom gaming console typically costs upwards of $100 million, with ongoing support ranging from $30,000 to $3 million per month. This includes hardware engineering, custom silicon design (APU), and software integration (SteamOS).
  • Valve's Approach: Unlike the original 2015 Steam Machines which were built by third-party partners (like Alienware and ASUS), the 2026 model is a first-party Valve product. This implies a significantly higher internal R&D investment to design the custom chassis, thermal solutions, and the semi-custom AMD APU (Zen 4 CPU + RDNA 3 GPU).
  • Pricing Strategy as a Clue: Valve has stated the device is not subsidized and is priced "in line with the current PC market" (officially $1,049 for the base model). This suggests the retail price covers the Bill of Materials (BOM) and aims to recoup the substantial upfront R&D investment over the product's lifespan, rather than losing money on hardware to sell software.

Cost Factors Influencing R&D
  • Custom Silicon: Co-designing the APU with AMD involves significant engineering costs.
  • DRAM Shortage: The project faced delays and cost volatility due to global memory shortages, likely increasing both component costs and the duration of the development phase.
  • Software Integration: Extensive resources were allocated to optimizing SteamOS and the Proton compatibility layer to ensure a "console-like" experience on PC hardware.
It is highly probable that Valve spent more than $100 million on the R&D and design of the new Steam Machine, though the exact figure remains undisclosed.

Several factors support this estimate:
  • Industry Standards: Developing a custom console from scratch typically costs upwards of $100 million, excluding ongoing monthly support which can range from $30,000 to $3 million. This covers custom silicon design, thermal engineering, chassis manufacturing, and deep software integration.
  • First-Party Investment: Unlike the 2015 Steam Machines (which were third-party PCs), the 2026 model is a first-party Valve product. This required significant internal resources to co-design the semi-custom AMD APU (Zen 4 + RDNA 3), develop the compact form factor, and optimize SteamOS specifically for this hardware.
  • Complexity & Delays: The project faced delays due to global DRAM shortages and rising component costs, extending the development timeline and increasing engineering overhead.
  • Valve’s Financial Capacity: With estimated 2024 revenues of $13.2 billion and operating margins exceeding 40%, Valve has the capital to fund substantial R&D projects without external financing. Their strategy often involves heavy upfront investment in hardware (like the Steam Deck and Valve Index) to expand the Steam ecosystem, recouping costs through software sales rather than hardware margins.
While the device is priced to cover its Bill of Materials (BOM) and is not subsidized, the sheer scale of engineering required to create a competitive, console-like PC experience suggests an R&D budget well into the nine-figure range.

For the new Steam Machine, estimates suggest the cost is likely in the lower-to-mid nine-figure range ($100M–$400M). This accounts for:
  • Custom APU co-design with AMD.
  • Chassis and thermal engineering for a compact form factor.
  • Extensive SteamOS software optimization.
  • Delays and extended engineering time due to DRAM shortages.
While Valve has the financial capacity (estimated $13.2B revenue in 2024) to spend over $500 million, typical console R&D budgets—even for major players like Sony or Microsoft—often hover between $100 million and $300 million for the initial design phase before marketing and manufacturing tooling.

Unless Valve included massive, undisclosed expenditures (e.g., building new factories or acquiring studios specifically for this project), a figure exceeding $500 million is less probable than a figure between $150 million and $300 million.

Here is the breakdown based on Valve’s estimated $13.2 billion revenue for 2024:
  • Operating Profit (Net Income from Operations): ~$5.28 billion(40% of revenue).
    • This is the profit Valve makes after paying for development, salaries, server costs, and taxes, but before interest and other non-operating items.
  • Operating Expenses (Overhead): The remaining 60%(~$7.92 billion) covers all costs required to run the business, including:
    • Cost of Revenue: Payment processing fees, bandwidth/server hosting for Steam, and hardware manufacturing costs (Bill of Materials for Steam Deck/Machine).
    • R&D: Salaries for engineers and developers.
    • G&A: Administrative costs, office maintenance, and legal.
Clarification on "Net":
  • If you mean Net Profit (what they keep) is approximately $5.3 billion (assuming 40% margin holds).
  • If you mean Total Costs/Overhead: It is approximately $7.9 billion.
Valve’s margin is exceptionally high for the industry because their primary product (Steam) is digital, meaning they don't have the massive manufacturing and shipping costs that console makers like Sony or Microsoft have on their base units (though hardware like the Steam Machine does carry higher direct costs, it is a smaller fraction of their total revenue compared to software sales).

How much software does Valve have to sell to those 500,000 hardware owners to break even

To break even on an estimated $100 million to $400 million R&D investment with only 500,000 hardware owners, Valve would need those users to generate significant software revenue, given their standard 30% commission model.

Here is the breakdown of how much software must be sold:

The Math: Recouping R&D via Software
Valve keeps approximately 30% of every game sale (or 25% after $10M, 20% after $50M per title, but 30% is the baseline for most transactions).
  • Scenario A: Low R&D Estimate ($100 Million)
    • Total Software Sales Needed: ~$333 million (Gross).
    • Per User Spend: Each of the 500,000 owners must spend ~$666 on games/DLC.
    • Valve's Cut: $200 per user × 500,000 users = $100 million.
  • Scenario B: High R&D Estimate ($400 Million)
    • Total Software Sales Needed: ~$1.33 billion (Gross).
    • Per User Spend: Each of the 500,000 owners must spend ~$2,666 on games/DLC.
    • Valve's Cut: $800 per user × 500,000 users = $400 million.
Context & Feasibility
  • Average User Spend: Current data shows the average revenue per Steam user is approximately $19–$25 per month (roughly $230–$300 per year).
    • At this average rate, it would take a user 2.5 to 3 years to spend $666 (Scenario A).
    • It would take 9 to 11 years to spend $2,666 (Scenario B).
  • Hardware Owners vs. Average Users: Steam Machine owners are likely "core" gamers who spend more than the average user. If they spend 2x the average (~$500/year), they could cover the $100M R&D scenario in about 1.5 years.
  • The "Break-Even" Reality: Valve likely does not expect to recoup the entire R&D cost solely from the software spend of the initial500,000 hardware buyers. Instead, they view these 500,000 units as:
    1. Seed Installed Base: These users will buy games for years (Lifetime Value).
    2. Ecosystem Expansion: The device attracts new users to Steam who wouldn't have built a PC otherwise.
    3. Future Hardware Sales: The goal is to sell millions of units over time, spreading the fixed R&D cost across a much larger base, lowering the burden per user.

Conclusion: To strictly break even on R&D with only 500k units, each user would need to spend between $666 and $2,666 on software. While possible for hardcore gamers over several years, Valve's actual strategy relies on selling more hardware to dilute the R&D cost, rather than relying entirely on extreme software spend from a small niche.

Probability of valve selling more than 500K units in the face of new PS6 and XBOX Project Helix

The probability of Valve selling more than 500,000 units of the new Steam Machine in the face of competition from the PlayStation 6 and Xbox Project Helix is moderately high, primarily because its direct competitors are not launching in 2026.

1. Competitive Landscape: No Direct Rivals in 2026
  • PlayStation 6: Sony has not announced a release date for 2026. Industry analysis and statements from Sony indicate the PS6 is likely targeting a Holiday 2027 or 2028 launch, as next-gen technology is still in simulation.
  • Xbox Project Helix: Microsoft’s next-gen hybrid console is also not expected until late 2027 or 2028, with developer kits only shipping in 2027.
  • Current Competition: The Steam Machine’s actual competitors in mid-2026 are the PS5 Pro (~$700) and high-end pre-built PCs, not the next generation of consoles.
2. Sales Projections & Demand
  • Analyst Forecasts: Piers Harding-Rolls of Ampere Analysis predicts that selling over 1 million units in the first year would be a "good result," acknowledging supply constraints and the niche price point. Conservative estimates place potential annual sales between 2–5 million units if supply allows.
  • Demand Indicators: The pre-order store page reportedly sold out within ten minutes of going live, necessitating a lottery system. This suggests demand significantly exceeds the initial supply, making the 500k threshold highly achievable even with a niche product.
  • Niche Positioning: At $1,049, the device is an "enthusiast product," not a mass-market console. It targets PC gamers wanting a living-room form factor, a demographic less likely to wait for a PS6 that is years away.
3. Key Risks to Volume
  • Price Sensitivity: The $1,049 entry price is nearly double that of a base PS5. If economic conditions worsen or if consumers perceive the performance (comparable to a PS5) as insufficient for the price, sales could stall below the 1 million mark.
  • Supply Constraints: Global DRAM shortages have already limited production. Valve may physically be unable to sell more than 500k units in the first few months regardless of demand.
Conclusion: With no next-gen consoles launching until 2027/2028 and intense initial demand evidenced by the lottery system, Valve is very likely to exceed 500,000 units in its first year, potentially reaching the 1 million+ range if supply chains improve. The lack of a direct PS6/Helix competitor in 2026 removes the primary threat to its market share.

So if valve sells a million units in 1 year, the software sales per unit sold to make back that R&D would be how much $ per owner

If Valve sells 1 million units in the first year, the software sales required per owner to recoup an estimated $100M–$400M in R&D costs would be:

The Break-Even Math

Valve retains approximately 30% of gross software sales as revenue.
  • Scenario A: Low R&D Estimate ($100 Million)
    • Total Gross Software Sales Needed: ~$333 million.
    • Per Owner Spend: Each of the 1 million owners must spend ~$333 on games/DLC.
    • Valve's Cut: $100 per user × 1,000,000 users = $100 million.
  • Scenario B: High R&D Estimate ($400 Million)
    • Total Gross Software Sales Needed: ~$1.33 billion.
    • Per Owner Spend: Each of the 1 million owners must spend ~$1,333 on games/DLC.
    • Valve's Cut: $400 per user × 1,000,000 users = $400 million.
Context & Feasibility
  • Comparison to Average: The current average revenue per Steam user is approximately $19/month(~$230/year).
    • To hit the $333 target (Scenario A), an owner needs to spend slightly above the average annual user spend (roughly 17 months of average spending). This is highly achievable for a dedicated console owner.
    • To hit the $1,333 target (Scenario B), an owner would need to spend nearly 6 years worth of average annual spending in just one year. This is unlikely for the average user but possible for "whales" or users buying many full-price AAA titles.
  • Strategic Reality: Valve likely does not expect to recoup the entire R&D cost from the software spend of onlythe first year's 1 million buyers. Instead:
    1. Hardware Margin: At the confirmed $1,049 price point, Valve is likely making a small profit on hardware (estimated $100–$150/unitafter BOM/labor).
      • 1 million units × ~$125 profit = ~$125 million directly recouped from hardware sales alone.
    2. Reduced Software Burden: If hardware sales cover ~$125M of a $400M R&D budget, the remaining software burden drops to ~$275M (or $275 per user).
    3. Long-Tail Value: These 1 million users represent a permanent installed base. Their software purchases in years 2, 3, and 4 continue to generate pure profit, eventually covering the remaining R&D deficit.
Conclusion: With 1 million units sold, each owner needs to spend between $333 and $1,333 on software to fully cover R&D.

However, because Valve is likely making a ~$125M profit on the hardware itself, the realistic software target per user drops to roughly $200–$275, which is very close to the average annual spend of a committed Steam gamer.
 
rinaldo00 said:
Not Lenovo/Dell but you have said the hardware market share of PS5 and Xbox.
Click to expand...
Oh, you are referring to THAT post without context - so now I get it - do the CAPS made context happen?
rinaldo00 said:
You put words in every one's mouth just to make your point.
Click to expand...
As do you... and that is the way a forum works.
Truncating posts as quotes, losing context, blah, blah, blah, you must be fun at parties!
WRONG

rinaldo00 said:
I am saying that will never happen with this Steam Machine at its current price.
Click to expand...
Going back for context...

usa all day said:
LOL, okay... yeah, but I think I am HOPEFULLY optimistic for 10+ million sold over the next year - easily beating xbox & hitting 50% of PS5 annual sales.
Click to expand...
HOPEFULLY optimistic - I'm not betting my life on it & I'm basing that on this initial release!
There will probably be a new GabeBox every 2 years from Valve + add the ALT MFG's & WOW!
Yes - I am HOPEFULLY optimistic there will be 10+ million boxes sold - maybe over 7 years - which is the typical lifespan of the PS/XB.
 
usa all day said:
Oh, you are referring to THAT post without context - so now I get it - do the CAPS made context happen?

As do you... and that is the way a forum works.
Truncating posts as quotes, losing context, blah, blah, blah, you must be fun at parties!
WRONG
Click to expand...


Not true, I never put words in your mouth, you are just all over the place with your posts and I can't keep up with what you claim. Make it easy to understand.


Do you:
1. Claim that the CURRENT Steam Machine will increase game sale market sales versus consoles.
2. Claim that the CURRENT Steam Machine will increase hardware market sales versus consoles.
3. Both.

Pick one and be brief.
 
Marees said:
I wouldn't dump an 8gb vram card on them.

my recommendation is to wait until 2028 jan when unified socs more powerful & cheaper than this are available
Click to expand...
Your standards are way too high. Yes, 8GB of VRAM does suck but you'll likely play video games on it just fine. Not only can you build a better machine, but you can buy one. Look at this machine with a RTX 5060 for the same price. Valve is betting on convenience. You can think of the GabeCube as PC gaming lite.
 
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kirbyrj said:
I think a lot more people were interested in "buying this thing" if the price was different. I can forgive a lot of questionable specs if it's $400-500 cheaper.
Click to expand...
I'd forgive the premium price if it had 16GB VRAM. Seriously, yes I'd be interested in spending $2K if the thing has 16GB VRAM. Hell my brother just dropped over 2K on a prebuilt and I'd have 100% just recommended the Steam Machine if it didn't have dogshit specs that will age like milk
 
DukenukemX said:
Valve is betting on convenience.
Click to expand...
I still think they're betting on this.

Screenshot_20260622-195856.png


And this.

fanboys-when-people-criticize-valve-because-of-sd-news-v0-6x5rvajmte4h1.jpeg


Also this.


View: https://youtu.be/hVRtJs9IrbA

And a smidge of this.

convenience.jpg


And a dash of this.

aWEKlQIvOtkhBOcY_SP959-Contentment-havevswant2026-01-09-13.52.16-Cr.jpg
 
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