Valve Announces Steam Machine: What Does the PC/ Console Hybrid Say About Future Gaming Hardware?

Valve expanded its hardware lineup on Wednesday, unveiling a new Steam PC/console hybrid, a next-generation controller, and a new Steam VR headset. The new family of Steam hardware, launching early 2026, will mark Valve's return to the console business with the Steam Machine. The PC/console hybrid, a roughly six-inch cube that looks like an Xbox Series X cut in half, is the most interesting among the new devices. It also perhaps signals what the home console could look like in the near future.

Steam Machine Amidst Other Consoles, Handhelds

The Steam Machine, capable of running AAA games at 4K, 60fps, will arrive in a rapidly changing games hardware market that accommodates traditional home consoles like PlayStation and Xbox, hybrid handhelds like the Nintendo Switch and Switch 2, and an army of Windows-based handheld PCs from OEMs like Asus, Lenovo, and MSI.

Valve's new hybrid console runs SteamOS out of the box, but will allow users to install an operating system of their choice. One could run Windows on the console if they wanted, and access other PC games storefronts from Microsoft, Epic Games, and others. In essence, the new Steam Machine functions a lot like some of the modern Windows-based handhelds that allow users to access their Steam library, the Xbox app on PC, and other game launchers from game makers like Ubisoft and EA.

The Steam Machine is a roughly six-inch cube
Photo Credit: Valve

The Next Xbox 

But perhaps more than modern handhelds, Valve's new pc gaming box resembles what is likely to be the next generation of Xbox consoles. Microsoft is reportedly preparing a new Xbox that will be a PC/console hybrid, running Windows with an Xbox interface on top. The company tested out the approach with its new Xbox-branded, Asus-manufactured gaming handhelds. The ROG Xbox Ally and the Xbox Ally X were launched in October, running Windows 11, but with a new Xbox full-screen experience that aims to bring a console-like, intuitive interface (similar to SteamOS) and reduce annoying Windows operations.

In an interview following the launch of the ROG Xbox Ally, Xbox president Sarah Bond said that Microsoft's approach for the Xbox-branded handhelds would, in part, guide the thinking behind the next-gen Xbox home console. Microsoft CEO Satya Nadella also suggested last month that the company was considering a hybrid PC/console approach for the next Xbox and would “revisit” the idea of a console as a PC.

And so, with the Steam Machine, Valve, in essence, has made the next Xbox before Microsoft could: a hybrid PC/console that can run Windows, Steam, and anything else. The Steam Machine could also kick-start a race to make more PC/console hybrids, just like the Steam Deck did with handhelds.

The new Steam family of devices
Photo Credit: Valve

More PC/ Console Hybrids in the Future?

OEMs like Asus, MSI, and Lenovo quickly jumped on the handheld PC bandwagon following the success of the Steam Deck. We already have two generations of Windows-based gaming handhelds and new Xbox-branded handhelds with a console-like Xbox interface. It's not a stretch to imagine other manufacturers considering PC/console hybrids after the launch of the Steam Machine, especially considering that Asus, Lenovo, and MSI already make PCs. It wouldn't take long for them to design a box, put a Windows PC inside, run a console-like interface on top (Xbox FSE, SteamOS), and start competing with the Steam Machine.

The appetite for PC/console hybrids, however, depends on pricing. Valve has not yet revealed the price of the Steam Machine, and Microsoft has said that the next Xbox would be a “very premium, very high-end curated experience,” suggesting it could be priced on the higher side. The Xbox parent launched a $1,000 handheld with the Xbox Ally X, and prices for next-generation consoles are very likely to go up.

In an era of $1,000 Windows handhelds, however, the Steam Deck maintains an edge on pricing. You can pick up the LCD model for $399 and the OLED variant for $549 in the US. If the company prices the Steam Machine aggressively, it could become a popular home console option, available ahead of the next generation of Xbox and PlayStation. And Valve has the early mover advantage. Just as the Steam Deck sparked a handheld race, the Steam Machine could herald a rush to create PC/console hybrids. And the next Xbox could find itself in a queue.