Valve Explains Why the Steam Machine is So Expensive, Not "Original Goal"
Valve says rising component costs made its original Steam Machine pricing goal “no longer viable,” while arguing that selling hardware at a loss would go against the open nature of PC gaming.
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Valve has offered more context for why the new Steam Machine starts at $1,049, explaining that the final price was not the company’s original target, but the result of rising component costs and its decision not to subsidize hardware like a traditional console maker.
In a Steam Hardware post announcing the launch, Valve said the Steam Machine will be available in several configurations. The 512GB model costs $1,049, while the 512GB bundle with a Steam Controller costs $1,128. The 2TB model costs $1,349, and the 2TB bundle with a Steam Controller costs $1,428.
That puts the Steam Machine far above the price of a typical console, which has been one of the main points of criticism around the device since pricing was confirmed. Valve, however, says the current pricing reflects manufacturing realities rather than the company’s initial plan.
"Over the past year or so, that has changed quickly and significantly, most visibly for RAM and storage components. There are a variety of reasons, all of which are affecting hardware products everywhere. The overall effect is that our original goal for the price of Steam Machine is no longer viable. So the prices we're sharing today reflect the state of the world for manufacturing, or, more accurately, it reflects the price of the components as we've secured them over the past 6 months.
Price wasn't the only thing impacted by all of this: availability was as well. There were periods where we found we couldn't source some of our components at all, at any price. More than anything else, this has impacted the number of units we've been able to produce for launch."
- Steam blog post
The other major part of Valve’s explanation is philosophical. The company says it is not subsidizing the Steam Machine, meaning it is not selling the hardware below cost in order to make money back through software, subscriptions, or a closed ecosystem.
Valve argued that selling hardware at a loss for competitive advantage, or buying exclusive content for that hardware, is usually done to build a more closed system.
The end result is a more expensive box than they wanted to originally make.
"The big, number one factor in cost is the components that make up the device, and you know, the cost of making it and shipping it and distributing it, etc. etc. I mean, as we said before, I think we really wanted the Steam Machine to be a good entry-level PC. I think we mentioned that in November, and we want it to be affordable for as many people as possible. It's definitely more expensive than we hoped."
- Yazan Aldehayyat, Valve Engineer, in an interview with Rock Paper Shotgun
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