Alienware: Steam Machine will 'be the least profitable system we ever sell'

Credit: Source: Steam

Steam Machines are back in the news, and not in a totally good way.

To catch you up, Steam Machines are living-room PCs dedicated to running games via Valve Software's SteamOS (which is based on Linux). There were a lot of them being shown off at CES this year.

Valve is writing the OS, they've created a custom controller to use with Steam Machines, and they may or may not be producing their own hardware. They do have a lot of partners signed on to create Steam Machines in various shapes and sizes.

Yesterday The Wall Street Journal ran a post about Steam Machines and in the process they spoke to representatives of a few of Valve's hardware partners. The most upbeat was Kelt Reeves, president of Falcon Northwest Computer Systems Inc. who merely said "If anyone can do this, Valve can do it."

The most damning was probably iBuyPower's director of products and marketing Tuan Nguyen, who shares my concern with the variety of Steam Machine configurations:

"It's like the Android phone marketplace," he said, "You have phones all over the place with wild specs and pricing." Consumers, he said, would be less confused and more attracted to the devices if Valve worked on one machine to market to consumers, much as Google Inc. does with its Nexus-branded phones.

It's an interesting comment coming from a company who had a Steam Machine at CES.

My own feeling about 'fragmentation' is that it takes away one of the two major advantages that consoles have over PC gaming machines: ease of use. If there were just three standard configurations, say ("Good, Better, Best" as Valve's Gabe Newell once said) it'd make it a lot easier for non-technical users to know that a game they're interested in was going to run well on their Steam Machine.

Anyway back to the WSJ. They talked to Alienware as well. Alienware general manager Frank Azor said they expected their Steam Machine to "be the least profitable system we ever sell." Alienware is trying to compete on price with the Playstation 4 and the Xbox One. (Some other Steam Machines hover around the $1,500 mark.)

When asked why Alienware would bother if margins are going to be so low, Azor said it was because of Valve's influence in the PC gaming market. Basically it sounds like Alienware feels that it is important to be part of the Steam Machine movement in case it takes off (I'm extrapolating somewhat).

My feelings about Steam Machines still haven't changed. I think the Steam Controller is an interesting piece of hardware but I'm not convinced that we need a Linux-based gaming system in the living room when so many games are only available on Windows. Valve seems to think if it leads, the gaming industry will follow and start launching everything on Linux. I guess we'll see.

Steam Machines are expected to start hitting the market this holiday season. It'll be interesting to see what kind of presence they have at E3 in a few weeks.

Read more of Peter Smith's TechnoFile blog and follow the latest IT news at ITworld. Follow Peter on Twitter at @pasmith. For the latest IT news, analysis and how-tos, follow ITworld on Twitter and Facebook.

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