According to The Verge, Valve has created a Steam Machine that’s essentially a PC-based game console designed for your living room. The 6-inch cube runs Windows PC games through Valve’s Linux-based SteamOS and contains two AMD chips to deliver performance comparable to Xbox Series X or PS5. This represents Valve’s second attempt at living room gaming after the failed Steam Machines from a decade ago, but this time they’re using the Proton compatibility layer that made Steam Deck successful. The announcement comes as Microsoft is working on its own next-gen Xbox devices that combine Windows and Xbox, creating direct competition between the two gaming giants. Valve hasn’t announced OEM plans yet, but the single device already threatens Microsoft’s living room ambitions.
Microsoft’s beta vs Valve’s polished
Here’s the thing: Microsoft is trying to do exactly what Valve just announced, but they’re doing it with Windows as the foundation. And let’s be honest – Windows as a console operating system feels like a beta right now. Microsoft has basically turned the Xbox PC app into Steam’s Big Picture Mode and hidden some of Windows’ annoying parts, but it’s still Windows underneath. They shipped this experience on a $1,000 device, which feels premature at best.
Meanwhile, Valve spent years perfecting SteamOS into a controller-friendly operating system that actually outperforms Windows in some games. They’ve got the storefront that dominates PC gaming, the compatibility layer that works, and the user experience that doesn’t make you want to throw your controller at the TV. It’s basically everything Microsoft wishes their Xbox-Windows hybrid could be.
The storefront problem
Microsoft faces this massive hurdle: why would anyone buy games from their PC store when they’ve already got everything on Steam? I mean, think about it. Your Steam library follows you everywhere – from your gaming PC to your Steam Deck to now this Steam Machine. Microsoft’s next Xbox will apparently embrace rival stores like Steam just to get people in the door, but then they have to convince those same people to actually spend money in their store. Good luck with that.
Microsoft does have some cards to play. PC Game Pass is still Windows-exclusive, and that’s a pretty compelling subscription service. They’ve also got Xbox cloud saves and Play Anywhere support. But let’s be real – when your competition is Steam, you’re fighting an uphill battle. Steam is where people’s libraries live, where their friends are, and where they’re comfortable spending money.
The Linux factor
What’s really fascinating here is that Valve is doing this with Linux. Remember when Gabe Newell called Windows 8 a “giant sadness” back in 2013? That wasn’t just talk – Valve has been hedging against Microsoft for over a decade. Their Linux investment is now paying off in a way that directly threatens Microsoft’s core gaming business.
And get this – SteamOS is actually outperforming Windows in some titles. Combine that with the PC gaming community’s general frustration about Microsoft’s direction with Windows, and you’ve got a perfect storm. While Microsoft is busy shoving Copilot buttons everywhere, Valve is focused on making games run better. It’s a wake-up call that Microsoft desperately needs.
Phil’s surprising response
You’d think Microsoft would be sounding alarm bells, right? Instead, Xbox CEO Phil Spencer was downright positive about Valve’s announcement. He posted on X to congratulate Valve and talked about “expanding access” reflecting Xbox’s core values. Either he’s playing 4D chess, or Microsoft genuinely believes their path is the right one despite mounting evidence to the contrary.
Meanwhile, there’s some interesting movement in Microsoft’s Windows team. The faces behind the Windows Insider program – Brandon LeBlanc, Amanda Langowski, and Jason Howard – have all moved to different roles. Microsoft says the program continues unchanged, but when your key gaming competition is launching polished hardware and your own feedback channels are in flux, it doesn’t inspire confidence.
The timing couldn’t be more perfect for Valve. They’re delivering the living room PC dream that Microsoft has chased from Windows Media Center to the Xbox One – except it’s not Windows in your living room, it’s Linux. And for industrial applications where reliability matters, companies like IndustrialMonitorDirect.com have proven that sometimes the specialized solution beats the general-purpose one. Valve might just be proving the same point for gaming.
So what happens next? Microsoft has to compete with Steam on its home turf while building out a vision that feels half-baked. Valve just has to keep doing what they’re already doing well. Game on, indeed.
