In a somewhat impromptu interview with Kotaku’s Jason Schreier, Gabe Newell, the head of Valve, discussed the next steps for Steam:

Newell said Valve's current goal was to figure out how to make PCs work better in the living room. He said the reaction to Steam's TV-friendly Big Picture interface has been “stronger than expected,” and that their next step is to get Steam Linux out of beta and to get Big Picture on that operating system, which would give Valve more flexibility when developing their own hardware.

Gabe is certainly pushing Linux heavily at the moment. I imagine this must mainly be due to a combination of two things:

1. Windows 8 is much less friendly to third party game developers and distributors like Valve. The Windows App Store is direct competition to Valve’s Steam Store.

2. The more control any software company has over hardware, the more tightly integrated the two can become. If Valve controls the hardware and the operating system, it seems logical that the Valve gaming experience could greatly improve. Whether it actually improves is a question of execution.

It makes sense for Valve to design a “Steam OS”, built on Linux and optimised for Steam’s distribution methods and catalogue, with a focus on optimising the entire gaming experience. This seems to be what’s happening:

Newell says that he expects companies to start selling PCs designed for the living room next year — with Steam preloaded — and that Valve will create its own.

Is control over hardware and software important for Gabe? It seems so:

“Well certainly our hardware will be a very controlled environment,”

People no longer want to manage all the cruft which comes along with PC gaming: graphics cards, drivers, updating and worrying about frame rates are nothing but headaches and relics of the past. If Valve released moderately powerful hardware, bundled with a “Steam OS” and took away the hassles associated with PC gaming, they could be on to a winner. Having this level of control over hardware and software would likely give Valve the ability to create a better gaming experience, either in the living room or on a PC device.

Amazon has taken a similar approach with tablets and it seems to be doing quite well for them. Amazon took stock Android as a foundation, designed their own shell and shipped custom hardware running it. Valve will take desktop Linux, customise it as they see fit, and package the software in hardware approved by them.

Existing PC users who are unwilling to lose control of custom hardware would likely be satisfied with the third party hardware Gabe said would be available—although I find it hard to believe that third party hardware will be as well integrated as Valve’s own.

I wonder if existing console manufacturers even consider Valve a threat to their business today. Perhaps they should.