Analyst Believes Valve’s Steam Machine is “Microsoft’s Worst Nightmare”

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It’s still unclear how gamers will respond to Valve’s Steam Machine when it’s released, but industry experts predict it could be a major problem for Xbox. Joost van Dreunen, a business professor at NYU Stern and industry analyst, even described it as “Microsoft’s worst nightmare” in a recent interview with GamesRadar.

According to Van Dreunen, Microsoft is moving towards combining its console and PC gaming divisions. With Valve now challenging the console market, Microsoft is likely to accelerate this trend, prioritizing services like Game Pass over selling consoles themselves.

According to van Dreunen, the Steam Machine poses a significant threat to Microsoft by prioritizing digital game access over traditional console hardware. He believes it accelerates the shift towards services like Game Pass and cloud gaming, diminishing the importance of physical consoles.

Valve’s Steam Machine, a small gaming PC designed to connect to TVs, could actually succeed before Valve is fully prepared. The fact that it uses SteamOS, which is based on Linux instead of Windows, also presents a challenge. If priced well, the Steam Machine has the potential to significantly impact future Xbox sales. According to industry analyst David Cole of DFC Intelligence, Microsoft’s console business has already been facing difficulties with hardware sales.

According to Cole, Xbox console sales are facing significant challenges. He suggests the emergence of Steam Machine indicates there might not be enough demand for a separate Xbox console. Van Dreunen agrees, pointing out that Valve could become the leading platform combining PC and console gaming, ultimately benefiting Steam more than Microsoft’s Xbox platform with Xbox games powering Steam’s growth.

Whether Valve’s Steam Machine significantly hurts Xbox sales depends heavily on how much Valve charges for it. Valve hasn’t announced a price yet, but Linus Sebastian from Linus Media Group suggests Valve might not try to match the price of consoles.

Sebastian explained he didn’t know the price of the device. He’d previously expressed his preference for a pricing structure similar to consoles, where the hardware cost is lower because the manufacturer takes a percentage of game sales. He’d suggested a price of $500 when asked about what he meant by a ‘console price,’ but the suggestion was met with silence and a negative reaction from those in the room.

Despite everything, Valve says the Steam Machine is about six times more powerful than the Steam Deck. One report showed it can run demanding games like Cyberpunk 2077 at 1440p resolution with 60 frames per second, and with upscaling, without much trouble. The machine’s performance is estimated to be between the Xbox Series S and the PlayStation 5.

Here’s a complete overview of Valve’s new hardware releases, with all the details you need.

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2025-11-20 17:12