Mike Ybarra also thinks that it would be great for Xbox if it left Windows behind to instead use SteamOS for its future hardware releases.
Valve's Pierre-Loup Griffais says the team is looking to be "pretty competitive" and offer a "pretty good deal" with the hardware.
Analysts have also noted that Microsoft has been struggling with Xbox console sales, and that Steam Machines could cause another dent.
According to Linus Media Group's Linus Sebastian, mentioning a console-like $500 price tag brought the energy of the room down.
A new triple threat from Valve makes its presence known, and it looks like Steam is all set to plant its own flag in the competitive battlefield of gaming hardware.
Engineer Yazan Aldehayyat also spoke about Valve wanting to offer good performance while still keeping the Steam Machine affordable.
"Gaming moves forward when players and developers have more ways to play and create," wrote the Microsoft Gaming boss on social media.
However, Valve's portable PC drops to 30 FPS in the 2020 role-playing game when enabling ray-traced sun shadows and reflections.
"We're not interested in getting to a point where it's 20 or 30 or even 50% more performance at the same battery life," said an engineer.
"The affordability is one of the reasons why we think a Steam Machine makes a lot of sense right now," said Yazan Aldehayyat.
"For us, it's important to keep making Steam distribution better and better - and distribute times, add regions and things like that."
Valve's cube-shaped portable PC solution appears to go toe-to-toe with Xbox Series X/S and PS5 in the living room space.
Is Valve about to enter Nintendo's turf?
Valve's attempt to get a piece of the console pie has finally been quietly taken behind the shed.
Microsoft may yet succeed where Valve failed.
A colossal failure.
As well as Steam Link and the Steam Controller.
Alienware's Steam Machine now up for pre-purchasing.
PC gaming is back at retail!
So it's on par with Wii U, basically.
