While how exactly the gaming market reacts to Valve’s Steam Machine remains to be seen when the pre-built PC finally hits stores, analysts believe that it spells bad news for Xbox. Speaking to GamesRadar, NYU Stern School of Business professor and industry analyst Joost van Dreunen went as far as to calling it “Microsoft’s worst nightmare”.
Van Dreunen believes that Microsoft is already on a path that will ultimately culminate in its console business coming together with its PC business. Since Valve is essentially throwing in the gauntlet in the hotly-contested console market, Microsoft is expected to push its business further down the same path, with a focus on services like Game Pass rather than hardware.
“Steam Machine basically turns Microsoft’s worst nightmare into a shipping product,” said van Dreunen. “It pushes Microsoft further down the path it’s already walking, where Game Pass and cloud access matter more than plastic boxes.”
The Steam Machine, which is essentially being pitched as a small console-like gaming PC that can be hooked up to a TV, will ultimately end up beating the company to the punch. It also certainly doesn’t help that Valve’s system runs on the Linux-based SteamOS rather than Windows. Assuming the PC is priced competitively, there is a chance that it might put a large dent in future Xbox sales as well. DFC Intelligence founder and industry analyst David Cole noted that Microsoft’s console business has already been struggling with hardware sales.
“Xbox console sales have really struggled,” said Cole. “Steam Machine is just another sign that there may not be room in the market for a dedicated Xbox console system.” van Dreunen also believes that this might end up being the case, noting that “The strategic risk is that Valve becomes the preferred PC-console hybrid, meaning Xbox games strengthen Steam’s ecosystem more than Microsoft’s own.”
However, this hypothetical scenario where Xbox sales are severely impacted by Valve’s Steam Machine will largely come down to how the latter company decides to price its pre-built gaming PC. Valve hasn’t yet confirmed any pricing details about the system as of yet. However, a recent report courtesy of Linus Media Group’s Linus Sebastian indicates that the company might not be aiming to compete with consoles on the pricing front.
“I can’t tell you what the price will be, because I literally don’t know,” said Sebastian. “When I said I’m disappointed it isn’t going to follow a console pricing model, where its subsided by the fact that manufacturer is going to be taking 30 percent of every game sold on it over the lifespan of this thing, because I feel that would be a more meaningful product, they asked what I meant by console price and I said $500. Nobody said anything, but the energy in the room wasn’t great.”
All that said, the Steam Machine has been described by Valve as being around six times more powerful than a Steam Deck. Another report also revealed that a heavy game like Cyberpunk 2077 is able to run at 1440p/60 FPS with upscaling “fairly easily” on the Steam Machine, with the report pitting the system’s horsepower as falling somewhere between Xbox Series S and PS5.
For more details on Valve’s recently-announced slate of hardware, here is everything you need to know.
