Valve revealed the Steam Machine earlier this year just as the global memory shortage began. Since then, memory prices have gone up multiples. Memory kits for desktop computers went from costing a few hundred dollars to nearly one thousand. Valve claims they are struggling to secure memory at decent prices just like everyone else. During an interview with Gamers Nexus, an engineer at Valve said:

“Look, there’s no contracts. There’s nothing. Those guys… they give us a price every month or something and they say, ‘you can buy that many,’ and it’s yes or no. And if we say no, then they never talk to us again.

Valve doesn’t get exclusive deals with the memory manufacturers. They’re relatively small players in the space and are stuck in a hard place. Valve decided not to sell the console at a loss and instead sell it at cost for $1049. I’m sure Valve wanted to get that price tag under four figures if they could.

A Steam Machine at $749 is priced competitively in the game console market and gives consumers an excellent choice among the other console choices: a base PS5 at $649.99, a Pro model PS5 at $899, an XBOX Series S base model at $449.99, or a XBOX Series X (Pro) model at $599. The Steam Machine performs on the level of a base PS5 but it also functions as a PC, leaving you to do as you please with no restrictions and no forced ecosystem.

However, at $1049, it now makes more sense to buy a PS5 or XBOX if you’re looking to get a gaming console for your living room. If you wanted the extra benefit of having a PC, you can build a better PC for the same price as demonstrated by Linus Tech Tips. The Steam Machine is a bit pricier than building your own because of the small form factor (SFF). SFF builds are more expensive to build due to specialized sizes for the computer components. In Valve’s case, they went with their own special compact design. If you build your own PC with similar or better specs you most likely will have a tower instead of an SFF build.

With the recent price woes Valve decided to implement a fallback strategy: let people create their own Steam Machines. A few days ago SteamOS 3.8 released, allowing anyone to install it on machines that use an AMD video card. Nvidia video cards are currently excluded due to their drivers being closed source on Linux.

So, with that said, all of the above makes it sound like Valve’s console days are numbered, right?

Well, not exactly. Valve is playing the long game.

Valve has been quietly contributing to open source project FEX , a translation layer that allows x86 programs to run on ARM64. ARM chips require far less power than x86. Just look at Apple’s recent laptops running Apple Silicon chips. You can play games like Resident Evil at max power while barely peaking above 150 watts. FEX is crucial because it allows the entire Steam library, which consists of nearly all games made in the last thirty years, to run on ARM processors even though they were created and designed to work on x86 processors.

Valve’s hardware running on ARM processors gives them the following advantages:

1. Cheaper manufacturing costs. Hardware with reduced power requirements could potentially reduce manufacturing costs when the memory shortage is over.

2. The Steam games library now runs on any device, anywhere. Steam Deck on the go. Steam Machine at home. Steam Frame, the recently revealed VR headset by Valve, could run these games as well.

ARM is the future of gaming hardware. It unlocks efficiency, new form factors, and scale. Although the Steam Machine runs on x86 processors, Valve’s vision is clear. All future hardware - the next Steam Machine and Steam Deck - will almost certainly use ARM processors.

The Steam Machine does indeed have an uphill battle with the current price tag, but Valve doesn’t need the Steam Machine to sell like the Steam Deck did. They already proved they can create quality hardware and provide an incredible gaming experience regardless of the price tag. The Steam Machine is laying the foundation for future hardware releases and the next generation of Valve hardware running on ARM.

By 2030 we might see a Steam Machine 2, Steam Deck 2, and Steam Frame equipped with ARM processors running the entire Steam library seamlessly between them. By that date, hopefully the memory shortage will be done, and Valve’s hardware offering will be much more affordable.