Steam Machines Will Not Be Major Profit Generators
Alienware general manager Frank Azor recently told The Wall Street Journal that it's going to be a challenge to sell the company's Steam Machine, that it will "absolutely" be the least profitable machine the company will have ever built. Why? Because unlike console sales, the company won't make any royalties off the software that's sold on Steam, and because Steam Machine makers are encouraged to sell their solution at console-like prices.
So why make a machine that will bring in very little profit? PC makers like Maingear, Alienware and iBuyPower are following Valve Software's lead. Once merely a developer of Half-Life, the studio's Steam software has transformed from a method to patching games to the biggest game-related market on the Internet, complete with a built-in social network. Valve, so it seems, has an awesome track record.
"If anyone can do this, Valve can do it," said Kelt Reeves, president of PC maker Falcon Northwest Computer Systems Inc. He agrees with Alienware: Steam Machines won't bring in a lot of money, but they're putting their trust in Valve's success. If the studio can build the #1 gaming digital distribution platform, then there's no doubt that Valve can transform the PC industry with the Steam Machine initiative.
After lots of rumors and speculation, the Steam Machine initiative was officially announced last year along with Steam OS and the Steam controller. Valve is shooting for a console-like form factor, but there will be several that take the typical PC tower shape. A Steam Machine, it seems then, only requires Steam OS and support for the Steam controller. Unfortunately, because of the diversity, gamers will see a level of fragmentation.
Tuan Nguyen, director of products and marketing at iBuyPower Inc., compared the Steam Machine environment to Google's Android: one operating system, one source of software and a number of different hardware configurations. What Steam Machines needs is a "Nexus" device so that customers are less confused and more attracted to the gaming PCs.
The first wave of Steam Machines is expected to hit retail sometime before the 2014 holiday shopping season. However, given that these machines require the Steam controller, the final launch date is in Valve's hands.