Can everyone please stop claiming and speculating that Valve’s new hardware will be loss leaders? If you watch LTT and Gamers Nexus’s first videos on the announcement, they actually spoke with Valve’s engineers. And the Valve representatives already said that the new hardware WILL NOT BE LOSS LEADERS.
There isn’t even evidence that the Steam Deck was a loss leader. All GabeN said was that the lowest cost launch model was priced “painfully”, which doesn’t necessarily mean it was sold at a loss, it could easily have been sold at a very tight margin.
And no, low margins does not meet the definition of a loss leader. A loss leader is a product sold below cost, in that every unit sold actually costs the seller money.
I get the desire to speculate on new hardware. It’s fun and it helps pass the time until we hear more info from Valve. But there’s limits to what is reasonable. Valve has already stated that the new hardware won’t be loss leaders, so hoping and/or claiming they are isn’t reasonable.
Sorry for the rant, but all of the comments that seem to have only skimmed headlines are quickly getting to me
To be a loss leader doesn’t the need to lead to something?
The only way it could make sense that they’re selling these at a loss would be - oh yeah. They’re coming straight for Nintendo / Sony / Microsoft now, huh?
The day I see a steam console in wal mart is a day I will be very happy.
For Valve it would ideally lead to a new Steam account being created. Which would make sense if someone got one as a gift or something, naturally they would set up a Steam Account if they didnt already have one.
Also the new offerings are very much something Johnny Joe who has only ever owned a PlayStation, Nintendo, or Sony console would potentially buy.
Of course Johnny Joe would put the entire thing up his ass and die from heavy metal poisoning because he’s an idiot, but his peers would actually use them.
I guess that would depend on the front end and game support. If it is any less user friendly than Xbox or Playstation, people wont want to use it
Johnny Joe and Little Timmy don’t want to fiddle with a bunch of settings and constantly change stuff to get games working. The Steam Deck does okay but I still find sometimes it needs some… coercing… to get some games to work right.
If they dial it in right, everything should work properly out of the box without needing settings changes.
I’m aware of Valve being very generous with warranty/replacements of controller hardware for the Index. Even years after the warranty is up. But I think this is because of the major durability issues and known defects that the Index Controllers have.
In any case, Valve seemingly has lost money on a certain percentage of Valve Index kits/controller hardware. Based on how many people I know, including myself, who have gotten replacement hardware from Valve. Sometimes many times for recurring issues.
But I’m not aware of Valve doing the same for the Deck.
Edit: and you can tell they focused really hard on making the new controllers more durable:
No charging port to melt
durable sticks that won’t start drifting
No special finish on the controller that can be worn/scratched away
No internal battery to go bad
seemingly far fewer delicate parts
Funny point on the melting charging port. 2 years or so after the Index came out, SteamVR started warning using with a status dialog that told users to stop charging their controllers while they use them. They never accounted for long play sessions and people who would want to charge while playing.
Console manufacturers sell at a loss because they need to sell the console first before they can sell anything else. They can expect to make that money back on software the user could not have bought without the console.
Valve doesn’t need people to buy Steam Machines to get them to start using Steam. In fact, I suspect most units sold will be to users who are already invested in the ecosystem. Selling at a loss would just be a straight loss to them.
I agree we don’t know if they’re loss leaders yet. I will say that even if the hardware is priced at a loss, though, it’ll sell more Steam games. Ultimately I don’t know if it really matters.
Though yeah, people should get past headlines. Lol
Yes, but that’s a different sale. My point is it can still be considered a loss leader if they sell it at cost. It took them many millions to develop it, so overall they would be losing money on the hardware sales.
That’s as opposed to something like Costco’s hot dogs. There was no R&D there, so if they sold it at cost, I wouldn’t consider it a loss leader.
An item that is sold to you at a loss in hopes that you buy more profitable stuff from them to make up for said loss. Game consoles are usually sold at a loss in order to get people into their ecosystems, so they can buy things like games and subscription services, which are more profitable.
They can’t sell them at a loss without a locked-down ecosystem. Sony learned that the hard way with the OtherOS support for the PS3 that lead to a ton of them being purchased to build cheap supercomputer ls and never spending a dime on games or software to cover the loss.
Is that part of the quote? Because I just saw “priced like an entry level PC, not like a console”, which was more ambiguous than saying “priced like a console”. One man’s entry level PC is $300, and another’s is $1000. I have a mini PC with the power of a PS4 Pro, which I’d easily consider entry level, and it cost me $530 about a year and a half ago.
It’s possible I’m just interpreting the quote wrong. I figured they were making the distinction between “console” and “entry level PC” as a way to say “The price isn’t set yet, but don’t expect this to be $400-500”
Yeah, leaving it ambiguous like this leads to wild speculation, and I think you misquoted that with your own assumptions. You might be right, but Digital Foundry seems to think $400-$500 is possible. Given the cost of my own mini PC, which is older and requires higher margins than Valve can get away with, I would even believe $400-$500. But we just don’t know. Everyone’s best guess for the price of this thing has a low floor and a high ceiling, which will make this all really funny once we know the actual price.
I know they don’t have the same supply chain at all but Apple sells an entry Mac Mini for $600. That makes me feel like a similarly priced Steam Machine is possible.
Apple mini is a hard comparison to make because the cheapest mini is a loss leader. Add a bit of extra ram or extra storage, which you have to do since the base model is very limited and the only way to get it is through Apple because everything is soldered together, then it is suddenly more than a $1k PC. They make the profits up with those upgrades which are practically mandatory and grossly overpriced.
I actually think that, while it’s maybe a fun topic for idle conversation…it doesn’t have a huge impact in the way traditional console pricing normally does.
With a traditional console, what the console vendor chooses to do on hardware is what you get. Maybe, as with Microsoft on the Xbox Series X/Series S, you get a high and low end model, but that’s as much choice as you get. All the games are made for that hardware, and whether the platform lives and dies depends on it.
But…that’s not really true of the Steam Machine. It’s just another PC, albeit preconfigured for Steam and HTPC-oriented. If you want to get a lower-end PC or a higher-end PC, you have the option of getting one and plugging it into a TV and running the same games on it and save some money or with a bit more visual bling. The games for PCs are already more or less written to scale up and down with hardware.
And it’s not like Valve’s platform is gonna live or die based on the Steam Machine the way a traditional console generation is, where success of a hardware console is high-stakes for the manufacturer and the players in successfully getting a game library going. I’d guess that it might help Valve make strategic inroads into gaming in the living room. But even if it completely bombs, Valve is gonna keep right on selling games to people to run on PCs (and the Deck) and their huge game library isn’t going anywhere.
I think comparing it to a console is the wrong mindset. It’s a computer first that can also be a console. It’s also a pre built Linux based computer you can have a higher degree of confidence that things just work even after updates. It’s a legitimate competitor for a new windows PC as much as it is a console competitor.
This comment is so silly and yet I keep seeing it everywhere. What do you think the Xbox and Playstations are? What is it that xbox and playstation customers are looking for that this small computer isn’t?
You are correct in that all technically fit the definition of computers. However consumers don’t care about technical definitions or think rationally about purchases. They don’t all do a rational analysis of the products on the market that would accomplish their goals and spend accordingly. They walk into GameStop and buy one of the boxes that makes call of duty show up on their living room tv. Just like the Deck fits the definition of a handheld computer with a built in screen and controllers for playing games but isn’t stealing any customers from the switch.
Deck isn’t selling millions and it’s doing just fine. The Steam Machine will be a small computer box priced as such and there won’t be a single person that decides to buy it over a ps5, and that’s fine. Valve doesn’t have to compete with consoles cause they don’t make consoles.
Valve themselves have said that the Machine will not be priced like a console but like an entry level PC whatever that means. The only people that will notice this to buy it are people who already know what a PC is.
No, it isn’t, in practice. Xbox and PS5 have more in common with my iPhone than my desktop PC or NAS when it comes to being able to do what I want with it.
It will be interesting to see how proprietary the Steam machine is. That’s how I’d end up classifying it as console or miniPC.
I think the difference is that the Xbox and PlayStation are locked down to their respective ecosystems with monthly subscription and only one online store. Microsoft and Sony have almost guaranteed return based on that alone. If valve prices this as a loss leader what’s to stop a large corporation to buy 20k steam machines and use them as computers instead of consoles. Then valve is just eating that cost with no return on the other side.
I’m not sure cost can be set aside from a price discussion when they’ve explicitly stated it won’t be a Costco rotisserie chicken.
With the number of consoles sold this generation, I’m not sure where the limit is for what people will spend to play the games they want. With console pricing has trailing budget gaming PC’s, I could see a number of people getting a Steam Machine in lieu of the next Playstation or Xbox.
What would be interesting to see in the future is the split between units sold to lifelong console players making a change, and pre existing Steam users with stuffed libraries buying one for the couch. If the latter make up the majority of sales, but they priced it like a chicken, that’ll be a problem pretty quick.
Hopefully it shakes out well and indie game developers reap some well deserved rewards.
I‘m always amazed at the amount of people believing the Steam Machine will be sold for the same or less than the most expensive version of the Steam Deck while being six times as powerful.
Just playing devil’s advocate here. I don’t necessarily disagree with you, but there are some interesting factors at play.
The Steam Machine won’t need a screen or battery, two of the most expensive components on the Deck. So that can go into better CPU/GPU/RAM instead.
Valve proved they can make a successful physical hardware product with the deck. That gives them a lot of negotiating power with AMD to get the best deal they can.
Unlike with the Deck, they’re releasing three new gadgets in almost all major countries simultaneously. That means they may have already started manufacturing months ago, and are benefiting from economy of scale at an entirely new level.
Yeah they said they are pricing the Steam Machine at PC market prices, but they do having to contend with reality. There are consoles on the market that are more powerful at a lower price point, it will dampen their sales for sure. I mean most pcgamers probably have more powerful hardware already, what is the incentive? Sure small form factor, but is it worth a premium price to the average pcgamer? Console peasants will turn their noses up at it, so who are they marketing to?
I can see the Steam Frames selling better due to it being a fully untethered VRPC headset that can play more than just VR games. Not to mention you can stream from a more powerful PC to the frames making the battery last much longer and better gfx fidelity.
The Steam Controller has to contend with a flooded market of users used to using one type of controller, so a little bit of an uphill battle there too.
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To be a loss leader doesn’t the need to lead to something?
The only way it could make sense that they’re selling these at a loss would be - oh yeah. They’re coming straight for Nintendo / Sony / Microsoft now, huh?
The day I see a steam console in wal mart is a day I will be very happy.
https://en.wikipedia.org/wiki/Loss_leader
You have no idea what you’re talking about.
Some of the third party steam machines from 2015 actually had some distribution to Walmart stores. I saw it in the flesh!
For Valve it would ideally lead to a new Steam account being created. Which would make sense if someone got one as a gift or something, naturally they would set up a Steam Account if they didnt already have one.
Yeah.
Also the new offerings are very much something Johnny Joe who has only ever owned a PlayStation, Nintendo, or Sony console would potentially buy.
Of course Johnny Joe would put the entire thing up his ass and die from heavy metal poisoning because he’s an idiot, but his peers would actually use them.
I guess that would depend on the front end and game support. If it is any less user friendly than Xbox or Playstation, people wont want to use it Johnny Joe and Little Timmy don’t want to fiddle with a bunch of settings and constantly change stuff to get games working. The Steam Deck does okay but I still find sometimes it needs some… coercing… to get some games to work right.
If they dial it in right, everything should work properly out of the box without needing settings changes.
I’d imagine they’re just porting over the exact same hi that’s already on the steam deck.
It’s great.
I thought they originally started their first attempt with Alienware? They gave up. I’d have to see how their newer one is better.
Lots and lots more compatible games is probably the biggest one
I’m aware of Valve being very generous with warranty/replacements of controller hardware for the Index. Even years after the warranty is up. But I think this is because of the major durability issues and known defects that the Index Controllers have.
In any case, Valve seemingly has lost money on a certain percentage of Valve Index kits/controller hardware. Based on how many people I know, including myself, who have gotten replacement hardware from Valve. Sometimes many times for recurring issues.
But I’m not aware of Valve doing the same for the Deck.
Edit: and you can tell they focused really hard on making the new controllers more durable:
Funny point on the melting charging port. 2 years or so after the Index came out, SteamVR started warning using with a status dialog that told users to stop charging their controllers while they use them. They never accounted for long play sessions and people who would want to charge while playing.
USB-C has durability issues when used like that.
Console manufacturers sell at a loss because they need to sell the console first before they can sell anything else. They can expect to make that money back on software the user could not have bought without the console.
Valve doesn’t need people to buy Steam Machines to get them to start using Steam. In fact, I suspect most units sold will be to users who are already invested in the ecosystem. Selling at a loss would just be a straight loss to them.
I agree we don’t know if they’re loss leaders yet. I will say that even if the hardware is priced at a loss, though, it’ll sell more Steam games. Ultimately I don’t know if it really matters.
Though yeah, people should get past headlines. Lol
Please actually read the body of the post. Valve has already said in an interview that they won’t be loss leaders
We could, you know, just wait and see.
*ducks*
But will the new valve hardware help fill the empty pit in my chest?
If you don’t have a rigid and openly hostile opinion within 3 seconds of a new product announcement, you are an anti-capitalist commie!!
WHY YOU LITTLE…
… Duck… Goose.
but… I want it now?
Even if they sell at cost, they’re losing money because of the R&D costs.
…But then in turn they’ll earn money with Steam sales, so they’ll be earning money.
Yes, but that’s a different sale. My point is it can still be considered a loss leader if they sell it at cost. It took them many millions to develop it, so overall they would be losing money on the hardware sales.
That’s as opposed to something like Costco’s hot dogs. There was no R&D there, so if they sold it at cost, I wouldn’t consider it a loss leader.
What the hell is a “loss leader”?
When a business sells something at a lower price than it costs for the purpose of attracting more customers.
Another example is Costco rotisserie chicken.
A product sold at a loss to attract customers who hopefully buy other products with higher margins that result in a net profit for the retailer.
An item that is sold to you at a loss in hopes that you buy more profitable stuff from them to make up for said loss. Game consoles are usually sold at a loss in order to get people into their ecosystems, so they can buy things like games and subscription services, which are more profitable.
They can’t sell them at a loss without a locked-down ecosystem. Sony learned that the hard way with the OtherOS support for the PS3 that lead to a ton of them being purchased to build cheap supercomputer ls and never spending a dime on games or software to cover the loss.
Since they’ve said it’s basically an entry level gaming PC that will cost more than a console, I think the >700, <$1000 speculation is most likely.
Is that part of the quote? Because I just saw “priced like an entry level PC, not like a console”, which was more ambiguous than saying “priced like a console”. One man’s entry level PC is $300, and another’s is $1000. I have a mini PC with the power of a PS4 Pro, which I’d easily consider entry level, and it cost me $530 about a year and a half ago.
It’s possible I’m just interpreting the quote wrong. I figured they were making the distinction between “console” and “entry level PC” as a way to say “The price isn’t set yet, but don’t expect this to be $400-500”
Yeah, leaving it ambiguous like this leads to wild speculation, and I think you misquoted that with your own assumptions. You might be right, but Digital Foundry seems to think $400-$500 is possible. Given the cost of my own mini PC, which is older and requires higher margins than Valve can get away with, I would even believe $400-$500. But we just don’t know. Everyone’s best guess for the price of this thing has a low floor and a high ceiling, which will make this all really funny once we know the actual price.
I know they don’t have the same supply chain at all but Apple sells an entry Mac Mini for $600. That makes me feel like a similarly priced Steam Machine is possible.
Apple mini is a hard comparison to make because the cheapest mini is a loss leader. Add a bit of extra ram or extra storage, which you have to do since the base model is very limited and the only way to get it is through Apple because everything is soldered together, then it is suddenly more than a $1k PC. They make the profits up with those upgrades which are practically mandatory and grossly overpriced.
I will be so impressed if they manage that. It would be a day 1 buy for me at that price.
Not like a console says not a loss leader to me.
I actually think that, while it’s maybe a fun topic for idle conversation…it doesn’t have a huge impact in the way traditional console pricing normally does.
With a traditional console, what the console vendor chooses to do on hardware is what you get. Maybe, as with Microsoft on the Xbox Series X/Series S, you get a high and low end model, but that’s as much choice as you get. All the games are made for that hardware, and whether the platform lives and dies depends on it.
But…that’s not really true of the Steam Machine. It’s just another PC, albeit preconfigured for Steam and HTPC-oriented. If you want to get a lower-end PC or a higher-end PC, you have the option of getting one and plugging it into a TV and running the same games on it and save some money or with a bit more visual bling. The games for PCs are already more or less written to scale up and down with hardware.
And it’s not like Valve’s platform is gonna live or die based on the Steam Machine the way a traditional console generation is, where success of a hardware console is high-stakes for the manufacturer and the players in successfully getting a game library going. I’d guess that it might help Valve make strategic inroads into gaming in the living room. But even if it completely bombs, Valve is gonna keep right on selling games to people to run on PCs (and the Deck) and their huge game library isn’t going anywhere.
I think comparing it to a console is the wrong mindset. It’s a computer first that can also be a console. It’s also a pre built Linux based computer you can have a higher degree of confidence that things just work even after updates. It’s a legitimate competitor for a new windows PC as much as it is a console competitor.
Cost aside. If they don’t price it competitively between the Xbox and the PS5, the Steam Machine will be DOA.
The Deck is a perfect example of what they should try to replicate. If they don’t do that, it will flop.
It’s a small computer, it isnt going after the Xbox or PS5 customers. It’s going for the people who want a computer in their living room.
This comment is so silly and yet I keep seeing it everywhere. What do you think the Xbox and Playstations are? What is it that xbox and playstation customers are looking for that this small computer isn’t?
You are correct in that all technically fit the definition of computers. However consumers don’t care about technical definitions or think rationally about purchases. They don’t all do a rational analysis of the products on the market that would accomplish their goals and spend accordingly. They walk into GameStop and buy one of the boxes that makes call of duty show up on their living room tv. Just like the Deck fits the definition of a handheld computer with a built in screen and controllers for playing games but isn’t stealing any customers from the switch.
Deck isn’t selling millions and it’s doing just fine. The Steam Machine will be a small computer box priced as such and there won’t be a single person that decides to buy it over a ps5, and that’s fine. Valve doesn’t have to compete with consoles cause they don’t make consoles.
Valve themselves have said that the Machine will not be priced like a console but like an entry level PC whatever that means. The only people that will notice this to buy it are people who already know what a PC is.
Consoles.
I have a hard time even figuring out what you’re trying to ask here.
That’s a small computer my guy
No, it isn’t, in practice. Xbox and PS5 have more in common with my iPhone than my desktop PC or NAS when it comes to being able to do what I want with it.
It will be interesting to see how proprietary the Steam machine is. That’s how I’d end up classifying it as console or miniPC.
The steam deck is also a small PC, just like the consoles and was priced perfectly for success
None of those consoles would directly boot into desktop Linux with just a few button presses.
As far as how most people use their computers there is little difference.
I don’t use my PS5 to surf the web. I know you can use it to watch movies and stuff, but I don’t use it for that either.
At best, it depends on what kind of user most of the console owners are.
I think the difference is that the Xbox and PlayStation are locked down to their respective ecosystems with monthly subscription and only one online store. Microsoft and Sony have almost guaranteed return based on that alone. If valve prices this as a loss leader what’s to stop a large corporation to buy 20k steam machines and use them as computers instead of consoles. Then valve is just eating that cost with no return on the other side.
The Ukraine military has been using steam decks on the front line Do you really think it’s affected their bottom line?
I’m not sure cost can be set aside from a price discussion when they’ve explicitly stated it won’t be a Costco rotisserie chicken.
With the number of consoles sold this generation, I’m not sure where the limit is for what people will spend to play the games they want. With console pricing has trailing budget gaming PC’s, I could see a number of people getting a Steam Machine in lieu of the next Playstation or Xbox.
What would be interesting to see in the future is the split between units sold to lifelong console players making a change, and pre existing Steam users with stuffed libraries buying one for the couch. If the latter make up the majority of sales, but they priced it like a chicken, that’ll be a problem pretty quick.
Hopefully it shakes out well and indie game developers reap some well deserved rewards.
Is the machine competing with consoles? I thought it was just packaging an adorable sized pre built PC.
I think this is the goal that it would be priced competitively with the Pro or higher end consoles
They’ve built an ecosystem that gives you that console experience and if you really want to use it as a PC then you can.
The whole thing screams high quality experience for those that want it to just work or those that want to tinker
They really know their audience
People still say this about the Steam Deck 3 years later even though, as you said, there’s no evidence of that, so, good luck with your message LOL
I‘m always amazed at the amount of people believing the Steam Machine will be sold for the same or less than the most expensive version of the Steam Deck while being six times as powerful.
Just playing devil’s advocate here. I don’t necessarily disagree with you, but there are some interesting factors at play.
Steam Machine is also bigger. Small costs money if you want powerfull.
Also, it’s newer hardware.
I think it will be priced at least a 100€ above the Deck, but I would also be willing to pay that for a console/living room computer.
I’m fully expecting an 800+ USD price tag. And I’ve made my peace with that.
That’s my average, but wouldn’t be super surprised if it was up to $1000 due to tariff and AI shenanigans
Really I’m just hoping it’s not much more than a PS5 Pro or Xbox Series X.
I don’t want either of those, but would love a gaming PC, but don’t have time to build or have the money to shop one really.
So this is a really good above middle ground, assuming it’s less than 1k.
Please Valve take my moneys
Yeah they said they are pricing the Steam Machine at PC market prices, but they do having to contend with reality. There are consoles on the market that are more powerful at a lower price point, it will dampen their sales for sure. I mean most pcgamers probably have more powerful hardware already, what is the incentive? Sure small form factor, but is it worth a premium price to the average pcgamer? Console peasants will turn their noses up at it, so who are they marketing to?
I can see the Steam Frames selling better due to it being a fully untethered VRPC headset that can play more than just VR games. Not to mention you can stream from a more powerful PC to the frames making the battery last much longer and better gfx fidelity.
The Steam Controller has to contend with a flooded market of users used to using one type of controller, so a little bit of an uphill battle there too.
According to Valve, it should outperform or match 70% of current PCs owned by gamers. So while not crazy powerful, it might be an affordable (hopefully) upgrade for some more low spec gamers.