Valve‘s efforts to bring Steam to Linux, as well as the company’s collaboration with Intel on improving its graphics driver and further optimizing the OpenGL port of Valve’s in-house Source engine, is generating a lot of excitement and fanfare. It seems Valve is also getting down and dirty on hardware development; this is based on Valve employee Jeri Ellsworth’s interesting comments about internal hardware prototyping, specifically the efforts on the wearable computing front. However, given Valve’s recent push towards Linux as an alternative platform for Steam-powered software titles, and Valve cofounder Gabe Newell’s growing disdain towards Windows 8, some have suggested that the company could launch new hardware, such as a Valve-built computer unofficially dubbed the “SteamBox.”

With that in mind, given the massive install base and mindshare that Valve has in the gaming community, the concept of a Linux-powered PC-like console by Valve for the consumer doesn’t sound like too much of a stretch, especially with the recent addition of Big Picture mode in Steam and the push for more innovative human interface devices. If a SteamBox-like product ever comes to fruition, I am not sure whether Valve would release hardware on its own given that it is a software company first and foremost. Beyond the prototyping phase, Valve would have to tape out its own design to manufacturing and ensure it meets proper hardware order quotas to guarantee an excellent bang for the buck on Chinese electronics supply chains; Valve would also be beholden to its customers by providing warranties and support for the hardware and software. Given how small the company is compared to Nintendo and Sony, this can become overwhelming in the long haul, without investing further into Valve’s internal infrastructure.

So what other possibility would Valve have to push a possible SteamBox platform to the masses, all the while minimizing support costs and improving availability of the aforementioned hardware to the public? Valve’s answer could lie in a hardware strategy similar to that of The 3DO Company.

The 3DO Company was initially a competitor in the video game console arena in the ‘90s. Trip Hawkins, then CEO of 3DO, decided that a console based on a set of fixed specifications would be released to various OEMs including Panasonic for manufacture, attacking other consoles that were much more closed and didn’t sublicense the hardware out to other companies. Developers who made software for the 3DO console had a ridiculously low barrier of entry thanks to low royalties. Unfortunately, as a consequence of nearly non-existent royalty fees to developers, parties that manufactured and sold their own version of the 3DO ended up selling the consoles at much higher prices than the competition due to a lack of funds for hardware subsidies, which could have been covered by higher royalties. If they had been as high as the Nintendo, Sega, or Sony consoles, the 3DO might have had a better shot. Another flaw with the approach of low publishing fees was the lack in quality control and a large selection of relatively mediocre games that crowded out good titles like Wing Commander III and Road Rash. After a few years, the 3DO console was taken off the market, and the company switched to a software-only development strategy, which was used up until The 3DO Company filed for bankruptcy in 2003.

With all the doom and gloom that surrounded the 3DO console, why would I suggest that Valve might adopt a similar strategy for its initial foray into the console space? I believe that what didn’t work for the 3DO could work very well for the SteamBox platform, given Valve’s wildly successful publishing platform as well as a nicely sized cut of revenue collected from developers, thus better contributing to hardware subsidies that would be necessary to get the system into the hands of as many gamers as possible. Honestly though, could the 3DO way be superior to having Valve’s product entirely in-house? Here are several reasons why I believe this would be a good bet for Valve:

  • Flexibility: Rather than developing one single product, Valve could give a base list of specifications to third-parties and, should they meet or exceed the standards dictated by Valve, they can elect to receive a “SteamBox Certified” logo as well as access to Valve’s customized Linux distribution with all the secret sauce and fixings.
  • Staying small and focused: Valve can remain the small software outfit it is currently and let a company that is experienced with hardware handle all the hassles that are involved with consoles, such as warranties and repairs.
  • Pick winners and losers: Valve will in essence be in complete command here, reserving the right to refuse certifications to companies that develop shoddy hardware and don’t meet Valve’s standards of quality.
  • Market penetration: With all the third-parties making their own compatible SteamBox hardware, Valve creates a hardware phenomenon similar to that created by the IBM PC. With the different varieties of the SteamBox, the customer has a choice that’s not limited to a single style, and product availability is much more pronounced on a global front.

This is pure speculation. For all we know, Valve might not even be considering whether to get in with a set-top box of sorts, and it could simply be a smokescreen or another distraction. Nevertheless, it’s nice to dream and think about what Gabe Newell has in store for the many Valve fans out there.

What say you? If you have a different take on the SteamBox project, please post a comment in the discussion.

“Needs” Ctrl+Alt+Del comic, used with permission from Tim Buckley