Analysts call Steam Machine “Microsoft’s worst nightmare” — Xbox games could one day benefit Valve more than Microsoft as Xbox console sales struggle

“As one of Steam’s largest publishers,” Spencer added, “we welcome additional ways for players to access games.”

Former Blizzard president Mike Ybarra echoed the view: “Xbox should focus on making great games. Do that and cost models, focus and morale will fall into place.”

“Xbox console sales have struggled,” says David Cole, founder of DFC Intelligence and industry analyst. “The Steam Machine may be another sign that there isn’t as much room in the market for a dedicated Xbox hardware platform.”

Van Dreunen warns of a deeper strategic threat: “If Valve becomes the preferred PC-console hybrid, Xbox titles could end up strengthening Steam’s ecosystem more than Microsoft’s.”

Steam Machine is “a console that refuses to admit it’s a console,” an analyst says, but “Valve isn’t trying to beat Sony or Microsoft at their own game so much as rewrite the rules.”