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
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It can’t be a loss leader.
The steam machine is, hardware-wise, just a regular Mini-PC. Valve even lets you put whatever OS you want on there. So if this was a loss leader, that would mean that non-gamers and even small businesses would buy these, would install Windows on them and use them as office PCs, with Steam probably not even installed on the PC.
With the Steam Deck, the form factor made it impractical or at least really weird to use them as office PCs. The steam machine doesn’t have that issue.
Lol this reminds me of that time the US Air Force built a giant compute cluster using PlayStation 3s. Idk if Sony sold those at a loss, but they certainly didn’t see any game purchases coming from the US Department of Defense
I guess this small articles provides us with the beginning of an answer? https://www.engadget.com/2010-02-05-playstation-3-still-a-loss-leader-six-cents-for-every-dollar.html
Exactly, but I don’t see anything keeping them from selling the Frame at a loss or tight margin. What else are you going to use that with but Steam games?
Even the Steam Controller is useless without Steam Input, but I’d argue it won’t necessarily sell more games. Maybe they could include it with the Steam Machine for “free” to bump the price of the machine up enough to not make sense for a company, but still sell it at a tight margin to sell more games.
Why would they sell any hardware at a loss at all? Console manufacturers do it to lock people into their ecosystem and sell them games at a premium, Valve doesn’t need that, people are already overwhelmingly favoring their store.
The same reason people go into debt for a burrito. It’s easier for people to justify a smaller cost now, and valve will make than money back later with extra games sold, especially in the case of the Frame.
We could, you know, just wait and see.
*ducks*
WHY YOU LITTLE…
But will the new valve hardware help fill the empty pit in my chest?
Sure, if you eat it.
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!!
I would be happy to wait and see but idiots online keep trying to insist it’ll be $2,000 even though the hardware isn’t close to worth that much. Some of these people are big influencers and really should know better.
Nah, it’ll probably be $800-1k. It’s basically a 7600 CPU + RX7600 GPU or whatever, and it’s not really upgradeable. So somewhere between the Series S and X in performance, and not subsidized by game sales.
… Duck… Goose.
Duck Game? Goose Game? OMG … Duck Duck Goose Game! I will be a billionaire
Worked for Goose Goose Duck!
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.
On the other hand, even if they don’t “make back” the loss, you can look at it as: how much money is Valve willing to pay to become a “mainstream” living room console competitor? Lose a couple billion dollars on Machine, but get 400k “give valve money, probably” machines plugged into TVs. Sony and MS have other divisions and they AND Nintendo have shareholder responsibilities. Those conpanies cannot tank a single year of number go down. Valve can, and surely there’s a price that Valve would be willing to play to be “the xbox”.
Probably true, but there is a chance they might convert some console gamers…
But not enough to bet on it with a loss leader probably.
They may be trying to muscle in on traditional console territory.
Steam has a well tenured reputation for having inexpensive games. They may be leveraging this to appeal to the console players turned off by the all recent price hikes.
I suspect the gabecube may be close to if not, at cost. I don’t think it’ll be at a loss.
Gabe has previously claimed that they developed the index because they didn’t want VR to die and even gave grants the game developers who made VR titles.
So it’s established that Steam is big enough and secure enough to risk cultivating new or disrupting old markets.
Operationally steam has low overhead and insane profit margin. Unless they fuck up the steam store they’re guaranteed massive profit.
If the new hardware flops and they lose a bit of money; Gabe just buys one less yacht and steam ticks on as normal.
As you say valve are incentivised to do this because it will move more people over to Linux. I suspect that they want that more than they’re really bothered about hardware sales so while I don’t think it’ll be sold at a loss, because frankly that would be stupid even if they could afford to do it, but I don’t think it’ll be anywhere near as expensive as some people seem to be claiming.
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.
that will cost more than a console
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 will be so impressed if they manage that. It would be a day 1 buy for me at that 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 wouldn’t be sure the mini is a loss leader…
Let me show the math:
The base M4 model is 16GB ram and 256 GB of storare and it costs $600, “cheapest minipc ever with such performance”.
The 512GB storage model costs $800.
May I point out that 256GB of ssd storage does not cost $200.
The 24 GB model costs exactly $1000.
No matter how much ram prices are ramping up right now, 8GB of sodimm ram does not cost $200…yet.
Anything else above those specs throws the Mac mini into $1k+ territory. It can go all the way up to $2600.
Now, Apple rarely publishes manufacturing numbers to the public. But historically this has always been their strategy. A base product that seems too good to be true (because it is) that leaves buyers wanting a bit more. For which they get skinned alive, price wise. Of course, I can’t be 100% certain that the base Mac mini is sold at a loss. But evidence suggests the $600 mark is priced exactly to act as a loss leader.
I’m right now in the process of building an “entry level PC” from components, here defining it as new currently produced off the rack parts, no used, no refurbished, and with a Ryzen 7500F and a Radeon RX7600 “AMD can’t decide whether their cards get an XT or not, so why should I?” I price it out right at $900. To go much below that, I’m gonna have to resort to some jank.
Dumpster dive a core i5 10400F Optiplex, stick a GTX-980 in it, install Linux Mint and you’re making 120FPS in CS:GO for the price of a foot pic.
Your entry level PC is what I would have called high end as little as four years ago. I built a machine in 2021 with a Ryzen 5 5600x and an RX 6800 XT; it still runs the latest UE5 games at high settings. I would call that above and beyond entry level.
High end would be the high end of the market components, right? So RTX 5090 ($2k+) or RX 9070 ($700+). High end CPU would be Ryzen 7 9800X3D for $400. Add a motherboard and copious RAM and you’re looking at $2k+ for all AMD, $3-5k for Nvidia.
Mid tier would be somewhere in the middle, so cut those numbers in half ($1-1.5k). Low end is what you can get away with, so cut the mod tier in half again, though going below $700 would be hard for anything but the most casual of games.
It’s a little hard to comment on high end 4 years ago with low end now because technology marches on, but no I don’t think it would.
I also built a PC with similar specs for my cousin (we’ll call her Lila) to that in October of 2022, Ryzen 5600X/Radeon RX6800 (non-XT). Built that rig for my cousin. Socket AM4 B550 chipset, 16GB DDR4-3200 RAM. I had a budget of $1500, $500 alone went to the GPU. The 6800 was two years old at that point. Solid mid-range PC that can handle 1440p gaming with no questions asked…okay one question asked: “are you sure you want ray tracing enabled on an RDNA 2 platform?”
You could go higher. 32 or even 64GB of RAM, a 5800X3D CPU, a Radeon 6950XT or RTX-3090 would provide much more solid 4k gaming with significantly better ray tracing…for a couple more grand.
The machine I built last year, a Ryzen 7700X/Radeon 7900GRE for myself. I spent $2000, I got socket AM5, 32GB DDR5-6000, a 16 thread CPU, and the third-to-highest GPU in the range. This thing does 1440p ultrawide or reaches into 4k with aplomb and ray tracing is worth turning on. You can still go up from here; the 7900XT and XTX are even more powerful and again Nvidia offers even higher, and there’s several CPU SKUs above me. Mine is a mid-to-high end PC, I expect it to be relevant for 5 more years, then I’ll buy a Ryzen 11800X3D on clearance for it.
Meanwhile, the PC I’m building now is for a 12 year old (Lila’s daughter, let’s call her Maggy). 16GB of DDR5-5600, a spec’d down 6-core without integrated graphics, the pack-in Wraith Stealth cooler, and a x600 tier GPU for a solid 1080p experience, more than enough for the hand-me-down 1080p60 monitor she’s gonna get with it. This computer is the same generation as mine, but less than half the price at $900 and change. And I honestly struggle to build much lower than that without resorting to used parts, new old stock, or jank.
Personally I don’t think I would say that most people would consider a $1,000 PC to be entry level. To me entry level means something that a kid could save up their pocket money for in a reasonable amount of time maybe with a paper route to supplement. I’d say entry level ends at about $700 just to throw a number out there. For $1,000 you could get a PS5 and a PSVR2
Not like a console says not a loss leader to me.
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.
I think that was overstated. Sure there were some “fun” projects for fun or publicity.
However supercomputer clusters require higher performance interconnect than PS3 could do. At that time it would have been DDR infiniband (about 20 Gbps) or 10 g myrinet.
Sure gigabit was prevalent, but generally at places that would also have little tolerance for something as “weird” as the cell processor.
OtherOS was squashed out of fear of the larger jailbreak surface.
>.> what have I done
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.
USB-C has durability issues when used like that.
Doesn’t the new controller have internal batteries?
I think they’re referring to the Steam Frame controllers, not the Steam Controller.
The steam frame controllers use AA batteries, the steam controller has a lithium ion internal battery.
Also it does have a USB port but the primary charging method is via the pogo pins. But obviously you might want to recharge from a wall outlet so they also include a USB port. But that’s obviously going to get used far less often than it would otherwise.
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.
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.
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.
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 sameuii that’s already on the steam deck.
It’s great.
Some of the third party steam machines from 2015 actually had some distribution to Walmart stores. I saw it in the flesh!
To be a loss leader doesn’t the need to lead to something?
https://en.wikipedia.org/wiki/Loss_leader
You have no idea what you’re talking about.
Im not gonna make any statements but I think this video might have some credibility. It comes from the person who gave the early heads up for the steam hardware launch :3
To be fair, I don’t watch either of those youtubers. So I had no knowledge of this.
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.
It’s newer hardware in a bigger form factor.
It should be 6x as powerful, that shouldn’t be a surprise.
The power is not a surprise because they said how powerful it will be. I never said anything to the contrary?
Sure, I should have clarified not surprised by the power or the price.
It makes sense that as more and more power becomes available, the price doesn’t necessarily have to increase.
Computers (especially CPUs/GPUs/SOCs etc) are becoming more and more powerful all the time, and more and more efficient all the time. It doesn’t mean that the price of them has to rise.
The fact that it’s 6 times as powerful doesn’t mean it should be more expensive than the most expensive version of the Steam Deck. The fact that it’s 6 times as powerful should be entirely expected, given the fact that it’s newer with a larger form factor (meaning that it may not be as limited in terms of heat etc)
Hopefully this is a detailed enough comment to clearly explain my thoughts on this.
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
The other problem is that the tariffs could be totally different by the time it releases. I fully suspect that the tariffs are the reason that we haven’t got a price yet.
It would be funny if it is noticeably more expensive in the US though like with the Switch 2.
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
I was expecting an APU
“stop speculating! it doesn’t align with MY speculation” oh ok.
Tell me you didn’t read the post before commenting without telling me
Even if they sell at cost, they’re losing money because of the R&D costs.
