Steam Machines unlikely to make “any impact at all” in 2014 – is Valve playing the long game?

Overpriced, underwhelming to look at and destined to cater for a small niche, the Steam Machines unveiled at CES are unlikely to make any impact on the current console race when they launch later this year.

That was the message from industry analysts this week after Valve unveiled the first wave of custom PCs built for SteamOS and its unorthodox controller. These Steam Machines’ pricing and the multitude of hardware models and configurations will make Valve’s plan to bring Steam into millions of living rooms worldwide rather difficult, says Games Investor co-founder Nick Gibson. “Despite making a big noise unveiling 13 Steam Machines at CES, Valve has yet to shed any significant light on what their strategy is or provide any compelling reasons for consumers to consider these devices over a console or a Windows PC,” Gibson tells us. “At this stage it is difficult to see Steam Machines having any impact at all on either console or Windows-based PC sales.”

IHS Technology’s director and head of games Piers Harding-Rolls agreed, saying: “While the ambition of Valve is to broaden the audience for its Steam community and games distribution platform, the high cost of the current collection of Steam machine prototypes means that this ambition is likely to be significantly undermined.

“We do not currently see Steam machines as a significant competitor to the latest games consoles or a viable alternative for the mainstream consumer.”

Alienware’s Steam Machine is one of 13 models unveiled this week at CES 2014. You can see the rest of them here.

Perhaps Valve is playing a different game entirely, then. Always keen to paint itself as a company which places players at its heart, its intention is not to take on PS4 and Xbox One – it is to carve out its own niche, says Newzoo CEO Peter Warman. “Valve is a completely different company to Sony and Microsoft – they do not think about unit sales. They focus on making games, services and now hardware that they, as game enthusiasts, would love to see in the market. Analysts will criticize the price of their hardware and initial sales but Valve will not care. As long as the gamers that go for their box get everything they want – most importantly freedom.”

CEO of GamesAnalytics Chris Wright echoes these thoughts. “The Steam Machines target the niche player and are aimed at the ultra high end,” he says. “The winner will be the company that builds the best ecosystem that gives players access to the games they want in the simplest way.”

And yet it’s difficult to picture who might be interested in actually buying one of these boxes, says IHS’ Piers Harding-Rolls, who describes that proposed player base as “a very small sub-segment of existing Steam users.” He’s more positive on the subject of Valve’s Steam controller, though, expecting sales of the pad to be “robust.”

It’s unlikely Valve will kickstart a console revolution when these Steam Machines arrive later this year, then, but over a longer timespan, their prospects could improve, adds Harding-Rolls. “As components become cheaper and console-graphic beating devices reach pricing parity with the PS4 and Xbox One, IHS expects the value proposition of Steam machines to increase.

The first flurry of Steam Machines could yet pave the way for Valve’s own Steambox in a few years’ time.

“Steam machines could be a greater challenge to consoles by 2016 – much will depend on the commitment of PC manufacturers at this stage and the impact of relatively entrenched console platforms. Other industry disruptions may also occur, specifically within the streaming sector, which may strengthen the proposition of Steam OS machines still further during the next three years.”

Ultimately, Harding-Rolls suggests, this first flurry of hardware could be little more than a testbed for Valve’s own Steambox. “A Valve-designed and branded Steam OS PC could arrive at a later date, once the market is established and its hardware partners have done their work,” he tells us. “We expect Valve to build a much stronger commercial understanding of its proposition using user data from the first generation of third-party Steam machines. With this deeper understanding, the greater brand pull of Valve, its ability to develop exclusives for its own platform and its ability to offset narrow hardware margins with content sales could make the company a more formidable competitor to the incumbent consoles than the currently announced PC hardware partners.”