Steamed
By Jason Schreier
July 17, 2026 at 6:00 PM GMT+1
On Nov. 12, 2025, Valve announced the Steam Machine, a living-room computer that the company had been working on, in some form or another, for more than a decade.
Maybe a week later, the company realized it had a problem. Thanks to the AI industry’s insatiable demand for data centers, memory and storage supply were becoming both pricier and harder to find.
“We knew there was going to be an issue with sourcing,” said Yazan Aldehayyat, an engineer on the project. “But the extent was beyond anything we actually expected.”
The Steam Machine finally came out this summer, arriving both later and at a higher cost than anyone at Valve hoped it would be, with a base price of $1,050 for the lowest-end model. Despite the hefty price tag, Valve has sold out every unit it has produced so far — although the company has also struggled to build as many as it originally wanted to.
Is the Steam Machine a success, then? To answer that question requires going way back in time to the inception of the hardware, which has been in the works for more than 14 years.
Valve is one of the most fascinating companies in the video-game industry. Founded 30 years ago by former Microsoft Corp. engineers Gabe Newell and Mike Harrington, Valve started off as a software developer making hits like Half-Life and Team Fortress but skyrocketed to success with Steam, a store for PC games that has become the most dominant distributor on the platform. Today, Valve remains privately held and is estimated to generate billions of dollars a year from Steam.
In other words, Valve is successful when PC gaming is successful, which wasn’t always a sure thing. While today the PC market is surging, the growth of consoles in the 2000s led to questions about its viability — and a whole lot of headlines predicting the death of PC gaming.
Around 2011, Valve began talking internally about bringing the PC experience from office desktops to living rooms. A year later, the company launched Big Picture mode, a controller-friendly interface designed for television sets. At the same time, Valve was publicly criticizing Microsoft’s Windows for becoming a more restrictive system, with Newell, Valve’s chief executive officer, calling it “a catastrophe for everyone in the PC space.”
Soon afterward, Newell was talking about making what they would eventually call the Steam Machine — a PC that would run the Linux operating system rather than Windows and take on consoles for living-room supremacy. Their goal was to create a PC that was completely open, allowing users to tinker and customize to their heart’s content rather than having to follow the rules of Windows or closed-console systems.
But instead of developing its own hardware in-house, Valve decided to partner with third-party manufacturers like Alienware for the Steam Machines. By the time the systems launched in 2015, the messaging was inconsistent and confusing. The operating system appeared to be unfinished, and the systems were expensive. Valve’s first game controller iteration received mixed reviews.
Within a year, reporters were calling Steam Machines dead on arrival. For Valve, it was an ego check and a learning experience. One problem, they realized, was that they hadn’t created a single base model that could demonstrate the value of living-room PCs.
“I think working with partners is great, but the absence of what we thought was a good starting point, or a good example for the experience, was a painful admission,” said Valve engineer Pierre-Loup Griffais.
Perhaps the biggest problem was that most PC games were designed for Windows and did not run on Linux at the time, limiting what customers could actually play. Few people wanted to buy a living-room PC that couldn’t actually handle most of their PC games.
“People just need all their games to be able to have a good experience,” said Griffais. “You can’t just have a subset of the catalog and say this is good.”
But asking developers to spend the time and money to bring their games to Linux for a limited audience was not a practical solution. The answer, then, was for Valve to do it themselves. As this Steam Machine initiative faded out, Valve began working on a technology that would allow Windows games to operate on Linux. No intervention necessary.
“We found that the only way that this is going to work is if you don’t have to do any porting,” Griffais said. “Just having to do a bunch of work to get the same version of the game running on a different platform is not that interesting. We’d rather game developers keep focusing on their games.”
The solution was a compatibility layer that Valve called Proton, which would seamlessly port games from Windows to Linux without asking for time or resources from developers. The company integrated this service into its operating system, SteamOS, and began building a handheld gaming device to demonstrate its capabilities.
“In general, our mission statement is to solve problems that Steam customers and gamers have,” said Aldehayyat. “Our goal is to just think about what is preventing people from playing their games right now, and how do we solve that. 90% of the time Valve solves it through software. There are instances when you have to make hardware to solve it.”
In February 2022, Valve released the Steam Deck. Unlike the old Steam Machines, this was produced by Valve, and it addressed every problem that the company had run into seven years earlier. Most PC games ran without any issues, while frequent Proton updates ensured that compatibility would continue to improve over time. The controls felt great, and the portability was a big win for players.
It was a slick device reminiscent of hardware from Apple Inc., with one important difference: it was all open-source. By default, it would run on the Linux-based SteamOS. But if you wanted, you could tinker with the device to download Windows or any other applications that suited you. Unlike, say, Nintendo Co.’s closed-off Switch, you could do whatever you wanted with the Steam Deck.
The following year, Valve put out a revised model with an OLED screen and more storage. After that, the company’s engineers began to take another stab at the Steam Machine — this time, as internal Valve hardware rather than via a partnership with third parties.
“I think the Steam Deck proved that yes, it’s finally ready — Proton, SteamOS — to be a good experience in the living room,” said Aldehayyat. “As soon as we realized that, we accelerated the Steam Machine development.”
Valve’s goal was to position its own Steam Machine as an entry-level computer and price accordingly, allowing third parties to make their own devices with SteamOS that had different spec customizations. But by the time the in-house Steam Machine was ready for production, the cost of building an entry-level computer was no longer reasonable thanks to the AI-driven memory crisis.
At a talk during the Game Developers Conference in March 2026, Valve engineers joked to the crowd that if anyone knew where they could get a line on some memory, they were all ears. Griffais said that if you tally up the individual costs of parts for the Steam Machine, “it ends up matching pretty closely” to the retail price, which independent critics have verified.
While console manufacturers like Microsoft and Sony Group Corp. typically subsidize their devices — taking a loss on the hardware in order to get more users in their software and service ecosystem — Valve didn’t want to do that. They didn’t want to muscle out other hardware manufacturers, the engineers said.
“We want it to still be viable for other hardware manufacturers to offer things like the Steam Machine either with higher performance or a different feature set,” Aldehayyat said.
Of course, this isn’t a purely altruistic move — Valve takes a hefty cut of every game sold on Steam and would benefit from any PC that relies on its market. But the pair of Valve engineers emphasizes that their company’s ethos is to foster open environments where anyone can innovate, be it a player designing a video-game mod or a hardware manufacturer devising some integral new piece of technology.
“We look at it from a long-term perspective,” said Griffais. “Someone that is creating one of those PCs might actually create some meaningful innovation that is really important for things to come on PC that becomes so universal and brings the experience forward by that much that now the experience is better for everyone and then people might buy more games.”
Similarly, the company had no desire to develop or release an exclusive game (like, say, a new Half-Life) alongside the Steam Machine.
“Restricting where people can play a game I don’t think is a great model, at least for us,” Griffais said. “We’re much more interested in having the whole PC catalog as our ‘launch exclusive.’”
By summer, the company was gearing up to release the hardware and pre-orders finally opened up on June 22, although the early supply was limited.
“We’re basically building everything we can get our hands on,” Griffais said. “We’re limited by memory capacity, for sure.”
Valve won’t share sales or production numbers, but the company says that the success of the Steam Machine is not correlated to the number of units they sell. To them, this device is about continuing to address a problem — open-source PC gaming in the living room — that they set out to solve more than a decade ago.
“We suspect that the Steam Machine is a really good way to solve a very real problem that people have,” Aldehayyat said. “If that’s borne out to be true, from our opinion, it’s a success.”
The pricing will eventually fix itself, he added. Either prices will come down or this kind of pricing will become normal if the memory crisis never abates.
“Honestly, it’s still getting worse,” Aldehayyat said. “Just in case people are not aware. What people are seeing on retail shelves right now, from our observations, is lagging what we’re seeing from a bulk supply by at least three to six months.”
The two engineers said that working on SteamOS in preparation for the release of the Steam Machine helped them solve a lot of problems that will lead to improvements even for the Steam Deck and any other devices that are using the operating system, such as fixing issues with memory management and ray-tracing performance.
And they said the chip crisis will have no impact on their roadmap for the future. They said they’ll be looking at customer responses to the hardware and reacting accordingly.
“Users are getting their machines,” Griffais said. “For a lot of the experience, the work starts. We’ll be doing that for years to come.”
