I made a new analysis video on three topics, expect some slides and some complexity:

- Why Valve’s doesn’t need to do the same as Sony and Microsoft

- Valve puts big big effort into this, it’s not only a “Hobby”

- SteamOS base gets big because of Sales and not just by OS switching

https://www.youtube.com/watch?v=cRzG1iRGwYY

@Jankarcop:

Thanks for the comparison, I love it :)

You know, we German speaking guys might all sound the same in English :)

As you might know Valve and Alienware have been working together to provide the so-called “flagship” Steam-Machine, which is supposed to lead the Steam-Machine trek.

video version

http://www.youtube.com/watch?v=77XrydFAUgw

Gabe Newell gets quoted on the Alienware title website:

“The result of our collaboration is the Alienware Steam Machine, a console that encapsulates the full potential of what a Steam Machine should be."

NOT upgradeable - ??? FULL Potential ???

For me that Machine definitely doesn’t “encapsulate the full potential of what a Steam-Machine should be.” I doesn’t even reach half of the potential a Steam-Machine should be.

A Flagship device should be fully UPGRADEABLE.

Why has Valve been mentioning this since the first announcements in September – UPGRADEABILITY. They wrote they create a guide for helping with upgrade decisions.

And now the “FLAGSHIP” Steam-Machine is not upgradeable - LAME.

I won’t buy that Steam-Machine, I’ll buy that CyberpowerPC Steam-Machine. It’s fully upgradeable with standard PC components. So I don’t have to buy a whole new Steam-Machine for being able to play 4k resolution fluently in three years, I’ll just need a 250 Dollar new graphics card and put it into the case.

So you buy the Alienware Steam-Machine and cannot upgrade, big deal, just buy a PS4 or an Xbox One, also no upgrades. The only difference between that Machine and the traditional consoles is that you’re not forced to keep SteamOS on it. But that’s all.

Very disappointing for a “FLAGSHIP” Steam-Machine which actually should provide all main advantages of a Steam-Machine not being a 100% traditional console. Why do they close down that leader Machine by using a proprietary tech solution just like Sony and Microsoft. I wouldn’t have cared if it was a Machine from some of the PC builders, but not the main “flagship” device - that’s ridiculous.

What I’m interested in is what others think about the non-upgradeability of four of the Steam-Machines and especially the “flagship” one:

Is it also an obligatory feature a Steam-Machine should offer for you?

Do you don’t care at all if upgrading is possible or not?

Do you accept the trade-off between the small form factor and using minimized tech solutions?

Is it Ok for you to buy a complete new Steam-Machine after only 3 years just to have a bit performance gain?

Last but not least: If some Valve staff actually read that stuff here, here’s a hint:

Make a second “flagship” Steam-Machine, same design as the Beta-Prototype and fully upgradeable – and you can shut up and take my money J And I would rather give my money to Valve than to CyberpowerPC. I’m from Europe and I don’t know that company, but I’ve been supporting Steam and Valve for years. Please give me the possibility to give YOU my money and not to CyperpowerPC with a fully upgradeable Machine.

Technical Note: Minimized custom printed circuit boards, like in notebooks and tablets, can only be upgraded “theoretically”, but not for a regular end consumer. Reason: the CPU, RAM and graphics solutions are not available for end consumer retail. You have to buy a complete new device if you want other hardware.

FYI: I made an own thread with a text and video analysis of topics like distribution, production and sales volumes of Steam-Machines:

http://www.gamespot.com/forums/system-wars-314159282/steam-machines-business-analysis-distribution-etc-31025021/#0

English youtube video:

http://www.youtube.com/watch?v=H4xxn58RXfs

German video:

https://www.youtube.com/watch?v=Y_sMD08MM7Y

CES Steam-Machines reveal – my analysis:

English youtube video:

http://www.youtube.com/watch?v=H4xxn58RXfs

German video:

https://www.youtube.com/watch?v=Y_sMD08MM7Y

The die is cast, the Steam-Machines manufacturers (OEMs) have been revealed at CES in Las Vegas.

Overview OEMs by focus region:

http://imgur.com/GJzrsWx

1) Worldwide big players among the OEMs:

o Alienware (DELL as parent company)

Worldwide known PC gaming brand, while directly employing 700 employees it is backed by DELL, one of the largest PC mass-manufacturer with over 100.000 employees. They have key access to all important distribution channels.

o Gigabyte

Worldwide known gaming brand, the Taiwanese company has more than 8000 employees. Established in 1986 the company has key access to all important world markets.

o Zotac

A Hongkong Chinese company with more than 6000 employees and key access to all important distribution channels.

2) Medium sized OEMs, which focus on specific regions:

Alternate (Europe, German headquarters)

Materiel.net (France)

Scan Computers (UK)

Webhallen (Scandinavia – Norway, Sweden, Finland)

Next Spa (Italy)

OriginPC (North America)

iBuyPower (North America)

CyberPowerPC (North America)

Digital Storm (North America)

Falcon Northwest (North America)

Maingear (North America)

3) OEM Steam-Machine versions overview by customer interests

http://imgur.com/qodHWR1

4) Primary business goals:

Valve: generate a big enough installed SteamOS base to attract most AAA developers

OEMs: mass produced Steam-Machines plus a lower number of high-profit Steam-Machines lead to an expansion of the installed SteamOS base

Figures projection:

1 Million Installed base -> nothing for AAA companies

4 Millions -> least amount for AAA companies to start considering SteamOS seriously

8 Millions -> attractiveness high enough for most AAA companies to join SteamOS platform

 Most important distribution channels are big CE Store groups and big general internet shops in terms of the expansion of SteamOS installed base.

SteamOS “wipe-off effect”:

SteamOS can be de-installed or combined with another OS within a regular Steam-Machine (because of regular PC components), that’s a good feature and gives flexibility in general. But SteamOS will also be judged in a timeline of about 1 year, whether it pays off to KEEP it on the Steam-Machine.

If Valve wouldn’t have achieved to get at least some bigger hit titles onto SteamOS after 1 year, there will be some people who just wipe-off SteamOS from the HDD or put a second one with Windows on it into the case.

So, at the end Valve has to deliver a noticeable progress in attracting developers for SteamOS.

A preview of this “wipe-off effect” can be seen in a thread within the Beta-Tester Steam group, where one Tester critizes the substitution of SteamOS with Windows:

http://steamcommunity.com/groups/300beta/discussions/0/630800444654911079/

Valve is under time-pressure to make SteamOS attractive for more and bigger developers.

Also: The installed base of the traditional consoles isn’t able to de-crease, while SteamOS installed base can de-crease.

5) The dependencies of Production volumes and Distribution channels:

http://imgur.com/z0Np2Kw

http://imgur.com/844Zm7F

http://imgur.com/XD72R7O

o Big consumer electronic stores (CESt)

Examples are big CESt groups like “Media Markt”, “Saturn” (Europes biggest CESt group), “BestBuy”, “Fry’s Electronics” (North America) and other similar big stores.

What should the customers see inside the stores for the public release of the Steam-Machines?

The Steam-Machines are focused on living room gaming. Alienware’s flagship Steam-Machine is (Quote) “priced competitive to PS4 and Xbox One”. The only way to make that clear is having an own category just like they exist already for Xbox, Playstation and Wii.

http://imgur.com/SxKH94J

http://imgur.com/rau4aaV

http://imgur.com/4Dxqd6k

http://imgur.com/YB14eAX

A big part of customers enters the store with the goal “I want to buy a TV-gaming device which fits me best”. They have no clue at all about the Steam-Machines and go to their well-known area with the usual suspects of Sony, Microsoft and Nintendo. If the Steam-Machines are not right THERE, those customers make their decision among their known devices:

Playstation 4, Xbox One or Nintendo.

o Big general internet shops like Amazon and others

I take Amazon as example as it is by far the most selling general internet shop around the world.

http://www.amazon.com/computer-video-games-hardware-accessories/b/ref=sa_menu_cvg?ie=UTF8&node=468642

Just like with the CE stores there has to be an additional category “Steam-Machines” within the category. So that especially viewers who don’t know about the Steam-Machines (see big CE store situation) will be aware of the new option. Because of that potential customers cannot “avoid” getting informed about the existence of Steam-Machines as purchase option.

If the Steam-Machines aren’t present at all in that main category, write off a big group of customers who don’t know about them or don’t care about putting effort in internet research about them.

o Specific PC Systems/hardware online and retail stores

Typically are therefore e.g. www.digitalstorm.com, www.alternate.de, www.scan.co.uk . The companies are medium-sized and they have a certain region as distribution focus. They don’t market their products worldwide. Also practically every PC store “around the corner”. When you take only one of those shops into account, the potential sales volume is of course small. But the multiply-factor leads to a significantly high sales Volume.

Leverage-effect projection:

Example 1: one PC Builder = 5000 units 11 x 5000 = 55000 units total

Example 2: one PC Builder =10000 units 11 x 10000= 110000 units total

Example 3: one PC Builder = 20000 units 11 x 20000= 220000 units total

An advantage factor for Steam-Machines with the PC-System sellers is that they often don’t offer the traditional consoles at all or at least not as focus. If a customer asks “What can you offer for TV-gaming?”, they answer “Our Steam-Machines”. They don’t add PS, Xbox or Wii because they don’t offer them or don’t want to sell them over their own SM. That doesn’t mean that customers do not know the traditional consoles. But in that store the Steam-Machines have a home game without the direct competitors in sight. Valve utilizes that situation by attracting so much System builders for their OEMs.

6) The requirement for an EASY-to-understand overview

As you can see with the four topics above I made myself an overview to the current a bit chaotically floating informations and myths about Steam-Machines.

Most of the customers especially the traditional console gamers entering an electronic store will not do that. They won’t sit down at their home desk and put hours of work in an overview of what Steam-Machines are, which features and which versions.

So here’s one main task for Valve and the OEMs for launch:

Make a VERY SHORT leaflet overview to be placed in retail stores.

Make an easy-to-understand website.

Make an easy-to-understand youtube introduction.

If there won’t be such an easy and standardized information access to SMs, don’t expect those people to care at all about SMs, because they don’t know about their existence and don’t have the motivation to put work into getting an overview on that jungle.

7) Killing Playstation 4, Xbox One and Wii U?

You might know some forum threads in recent weeks which asked that question.

In a more serious attempt to answer the question: NO, Steam-Machines won’t kill the traditional consoles. It's not realistic that they even get 50% of the living room market cake. Because a lot of traditional console gamers have a connection to those consoles for years.

Nevertheless there are also other kinds of people; people who also look into new possibilities by their nature. So the success formula of the upcoming Steam-Machines is quite simple: Where there’s a new option occurring beside the old ones you’ll find a certain percentage adapting that and changing minds. My estimation is that within one year the Steam-Machines are capable of convincing around 10-15% of traditional console customers to change platforms or e.g. go for a Steam-Machine as “second console” and not a PS4/Xbox One/Wii U.

If the installed SteamOS base reaches the barrier of about 4 million the bandwagon won’t be stoppable for the competitors.

Good for Steam-Machines in that situation:

They have no hardware END like the consoles and will be able to deliver full-power 4k resolution by cheap upgrading in 2 to 3 years.

PS4 and Xbox One won’t offer 4k with 3D games, at no time.

One strategy for the first two years of Steam-Machines: attack and don’t loose ground

8) Target group “combo buyers”

People who buy both major consoles, PS3 + Xbox 360, PS4 + Xbox One

Combo Breaker Steam-Machine:

Get one original console (PS4 or Xbox One) PLUS Steam-Machine.

Reason: Pay 20 Dollars or less for AAA multiplatform titles in Steam-Sales, digital game stores and keystores

Example:

100 Dollar Steam invest = 5 Top titles

100 Dollar PS4/Xbox One invest = 1, 5 Top titles

9) Closing Topic: How could a “Left 4 Dead 3” increase Steam-Machines sales volume?

Let’s look back to the “free give away” of L4D 2 during Winter Sale. Keep in mind that Valve does all actions with a purpose. With a peak of over 169k simultaneously L4D 2 players it achieved one of the top peaks of all Steam games. That action was a simple test run to see how much attention the game series is able to draw when offered FOR FREE. They didn’t do it because they’re into social welfare or anything.

As given fact Valve won’t make any of their upcoming games exclusive to the Steam-Machines. Their software concept is very different to Sony, Microsoft and Nintendo. We will see new Valve games developed for every major platform including PS4 and Xbox One just like Portal 2 and CS:GO are multi-platform titles.

But that doesn’t mean Valve would have no option to raise the motivation for a customer to buy a Steam-Machine. A possible way would be to simply add “Left 4 Dead 3” as free download to every sold Steam-Machine. With that move Valve would stay true to their statement as well as significantly raising the attractiveness to buy a Steam-Machine. The direct competitors PS4 and Xbox One would get the game too, but with the regular high price tag of a major game like 60 to 70 Dollars/Euros.