Valve Announces the Steam Machine

[The Minsky Moment]

The costs of RAM, storage, GPUs are really off the charts.  I saw another guy try to do a DIY version of Steam Machine; he crammed a much better GPU into the package, but it hit US $1400 on a DIY build.  It's just what the components cost now.

[Josquius]

Aye, I do sort of observe that developers are paying attention a little. There seems to be less of a push for the flashest and most demanding graphics these days.

[viper37]

I was looking at various Prime Day promotions and Minisforum is advertising their G1 mini-PC, which makes an interesting point of comparison because it's the same price (1439 US) as the highest end Steam Machine.

The Minisforum has twice the RAM and a better GPU (RTX 5060) and should perform around 50% better.

However . . .  the Minisforum is larger, less aesthetically attractive (my opinion but I think well based), and runs very loud which makes it less desirable in a living room.  It also has half the storage of the high trim SM, and doesn't come with the Steam Controller.  It runs an NVIDIA CPU and so can't run Steam OS at all (and likely won't run other Linux distros well) which means running whatever state the "Windows X Box Experience" happens to be in.  Clearly the Minisforum offers the superior price/performance ratio and better upgradability, but the SM has it beat on everything else.

Taking all in, it does seem like the SM is priced around what the market is for small form factor prebuilt PCs. It's just that the PC market utterly sucks.

That said, I think Valve should have taken a bit of hit to get the price under 1000 for at least the base version.  It's clear they are supply constrained, and they probably are thinking there is no reason to cut price. But the $$ either way aren't significant for them as a company. If they priced it lower, they could have gotten the benefit of better press and consumer FOMO.  It's much better to have people frustrated because they can't secure limited supply of a desirable object, then people frustrated because they feel they are being ripped off by inflated prices.

They are all missing important points.

Yes, an individual can build something better for a similar price.  It's easy.
But it's going to be bigger.  And you can't build 5 million of those things.

That's the constraints Valve was working with.  They ask for ram price, supplier gives one, it's yes or no and if it's no they never talk to them again.  Simple as them.

I look at the prices on pcpartpicker, I buy when I want to buy.  I have no time constraints (except when there's a failure), I wait for specials, I build my computer over some months, a few parts at a time.

They have some discounts for volume, but not that much, and they can't get ram or GPUs for the quantity they need it.

As for subsidizing the price, it's something they could have done, but I think they're playing a very long game here.

They ain't betting on Steam Machine to compete with Xbox or PS, but they want SteamOS to be a real competitor to Windows one day.  and for that, they need to generate some buzz toward Linux.  That will attrack peripheral makers attention (Nvidia... also, Broadcom) and force their hand a bit to work with them on drivers.

This is already slowly working, and, combined with the AI buzz, server demands, Nvidia is finally having a dedicated team working on Linux drivers for their products.  

Sometime early 2027, their should be much better Linux drivers for SteamOS (Arch) and Linux in general when it comes to all Nvidia products, and have them maintained.

Right now, it's still hit and miss what is working with Nvidia.  And anti-cheat is a problem on Linux.

Having Steam Deck and Steam machines out there adopted by a few million users sends a message that SteamOS is now a viable platform, more users download it for their PC, more people join Steam for PC gaming, more and more gamers are curious about Linux and that's a win for them, eventually.

They're the only gaming "store" that is working on Linux, for now.  And no matter who comes after (say, Epic), they're still the first and will already have a huge advantage to making their platform just work.  Epic is just thinking at hiring a developer to work on Linux anti-cheat now.  They have a lot of catch-up to do.

[The Minsky Moment]

Viper I agree with pretty much everything you said except the conclusion.  I do think Valve is playing the long game but that's the very reason they erred in pricing.

The reality appears to be that there are severe supply constraints, so the profit impact is essentially irrelevant regardless of the price.  We are talking about a swing of 10-20 million in margin for a company making over $3 billion a year.

If the goal is to generate buzz and PR, then pricing the SM low would have been the best way to do that. Instead they are getting ripped all over the internet, fairly or not.  It seems like a huge missed opportunity.

Sharma at MSFT is holding her cards close but it is not inconceivable MSFT could release a "Helix" that is far more powerful than SM at the same price, and is functionally a PC but either gimps or blocks the Steam store.  At the same time MSFT: (1) relaunches their XBox gaming store, with preferential pricing for their substantial publisher catalog, and (2) offers third party publishers distribution with only a 10 percent cut (compared to Valve's 30).  Granted, it's MSFT so they probably don't do that, or badly screw it up if they try.  But if they did do that and pulled it off, it's the one thing that could legit threaten Valve's effective PC gaming distribution monopoly.

[viper37]

Sharma at MSFT is holding her cards close but it is not inconceivable MSFT could release a "Helix" that is far more powerful than SM at the same price, and is functionally a PC but either gimps or blocks the Steam store.  At the same time MSFT: (1) relaunches their XBox gaming store, with preferential pricing for their substantial publisher catalog, and (2) offers third party publishers distribution with only a 10 percent cut (compared to Valve's 30).  Granted, it's MSFT so they probably don't do that, or badly screw it up if they try.  But if they did do that and pulled it off, it's the one thing that could legit threaten Valve's effective PC gaming distribution monopoly.

They are getting ripped, but at the same time:
- it's sold out in Asia
- on Ebay, you can find pre-sale spot for the Steam Machine selling at 2000-2500 US$ and it seems there are takers.  I've only looked for Canada, and I see a few offerings at 2500-3500$ CDN, pre-sale, sold when it is delivered.


It is hard to say it's a total failure.  Hard core PC gamers won't buy it, but... I would not have bought this at any price.  There is certainly a niche for this.

Would they have sold more by lowering the price?  For sure.  But they wanted to create a buzz with a few machines, imho.  It's possible their next iteration will see a reduced price and they'll be ready to take a loss on each machine sold to gain even more consumers.

If they sell a few millions and SteamOS finds itself on a few million other machines, Valve will have won round 1.  Round 2 might see them releasing better hardware at a better price in a few years.

But it's hard to tell with Micron having locked its ram sales for 5 years, and ram becoming a commodity like oil.

[The Minsky Moment]

Sure it's sold out because supply right now is probably around 20K.   I highly doubt total production run for 2026 will get anywhere near 1 million units.

The ebay listings only prove that there are at least few hundred Valve fanboys in the world rich enough that any price in the 4 figures is trivial.

RAM is expensive now because demand outstrips supply.  It will continue as long as the AI hyperscaling complex keeps its Wylie Coyote legs pumping despite having run out of ledge. It could go 6 months, a year, two years maybe.  But if a crash comes, there will be a lot of surplus to requirements RAM dumped on the market and a lot of excess supply without ready takers.

[Grey Fox]

I live with the cope that the AI scalers will not buy the RAM they have earmarked.  A lot of excess supply & capacity is going to materialize over night one of these days.