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I tried to phrase the submission title neutrally; the article uses phrases like "dead in the water", "utter lack of market demand", and "time to declare Valve's Steam Machine DOA". Not entirely unfairly, I think; it seems pretty clear now that the Steam Machine is a failed experiment.
As mentioned in tfa's comments, the Steam Link may be undercutting the Steam Machines' sales... In any case, I think it was a decent experiment.
I think it isn't a failure. There are some big successes/

1) Give them leverage on Microsoft to not mess with PC Gaming Ecosystem?

2) Cross Platform more common - personally I am glad more and more games are being made cross platform.

3) Steam Controller sold 500,000 units.

4) Linux has gotten a lot more visibility and GOG.com supports it.

Linux gaming support will be a slow process, but it has definitely improved a great deal in recent years thanks in large part to Valve's efforts. I think that Steam Machines were more of a signal to consumers and developers that Valve is ready to make Linux gaming viable, and to Microsoft that Valve is ready to take them head on re: walled gardens and desktop app stores, which were more of a concern when Steam Machines were first announced.
Most Steam Machines sold are running windows / dual boot.
Still doesn't change the gains as I presented.
1) Where do they advertise steam machines? Maybe they'd sell more if they advertised a little

2) Wasn't vulcan supposed to help somehow? Vulcan is still in its infancy and I'm guessing some big titles will come out later this year.

>less than half a million Steam Machines sold over a span of more than half a year.

Doesn't sound too bad to me. Plus consoles in general are having worse sales this year compared to the past.

I always thought Steam Machines were intended to be a hedge, if Microsoft continued down the Windows 8 path of "make everything a Metro tablet app and lock out Win32 games". Since Microsoft did a near-total 180 on that for Windows 10, Steam Machines don't have much of a purpose anymore, but could still be judged a success. You don't call a hedge "failed" if the bad scenario never came to pass; it was good risk management.
Steam Link definitely undercuts sales. It's a great experience if you have a steam pc in the house.

But steam box isn't dead. It's not like a console where the platform IS the hardware. Steam's platform is... Steam. Valve can keep at this. Steam compatible games are on the increase.

I think this is still toe in the water stuff for Valve.

Wait till Half Life 3 is a steam box exclusive. ;)

Are people still excited for HL3? It has been so long that at this point I've lost all interest. And this is coming from a huge fan of the HL series.
I just played through Portal 1 and 2 in a sleepless weekend. I don't recall the last time this happened, and it made me wish for HL3 all over again. To you gamers out there: Is there any other experience like it that is playable on my gaming-crippled two-year-old Macbook Air?
While I don't think Steam machines are DOA quite yet, they target an already difficult niche for which Valve's indecisive approach is ill-suited.

The lack of marketing and immaturity of platform and user experience mean the most viable demographic is existing PC gamers. However, existing PC gamers are adverse to markups for what are basically SFF PCs, and are much more inclined to build their own (or buy a lower markup, non-Steam branded PC) to fill that niche. More affluent parts of the demographic less concerned about markup also tend to be older and prefer something more subtle than the gaming glitz styling and branding of most of the premium Steam machines.

There's also self-cannibalism in this demo. Few of the Steam machines are top-tier components for the sake of heat and noise, so it's easy for most existing PC owners to fill this niche by simply replacing their current PC (as most do every few years) and demoting the old box to the TV room. As you mentioned, Steam link or NVIDIA's in-home streaming on Shield TV can also fill most use cases (at least they do for me).

Valve could have leveraged the initial hype and novelty of Big Picture and the Steam machine concept to drive an initial wave of sales, but the delay between those announcements and a consequential number of actual machines being ready to buy outlasted the initial hype.

The important thing is that Linux games on Steam remain strong enough so that publishers continue to port their games to Linux. I believe that is the case (mostly because Unity makes this relatively easy, so it's worth it to chase the 2%).

As long as Linux game support remains strong, Valve and game makers have a lever on Microsoft, which is all they want. They don't care about Linux, they just care about not being squeezed by Microsoft.

Steam Machine can die, but it can be quickly resurrected as long as the games are there.

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sells very poorly compared to xbox one and ps4 and pc.

in their current state (with missing ports and driver performance) that they sold any is almost amazing.

As a linux gamer though, I'm appreciative that there are many games available to play now because of their efforts though.

They should make one for VR. A certified Vive VR box that Just Works, with great Steam integration.
It's not surprising tbh. Steam Machines are the worse gaming consumer item that have been created in a long time.

The are worse than consoles as they are still as complicated than a PC gaming setup or even more so if you choose to use the SteamOS option which is also why most people opted in for the Windows Steam Machine or a dual boot one.

And unlike most gaming PC's the hardware for many of them is just pitiful at a huge markup and considering you lose the highly optimized low level access that consoles provide most of them cannot play modern games at 1080p@60 at settings that are acceptable to PC gamers.

There isn't a single Steam Machine being promoted now which is even considered an entry level gaming setup, and paying 1000$+ for a microATX box with a GTX960 in it is not something that the crowed that knows what Steam is and hence knows something about computer hardware will do. And the few that can be configured with high end or even mid range graphics card cost more than your average branded gaming PC still.

Valve really should've done something every simple and that's to have 3 bands of Steam Machines at 500, 800 and 1200$ with more or less the same hardware and each band should've been clearly marketed home-media / 720p light gaming for the 500$ one, 1080 gaming for the 800$ one and 1080@60 gaming for the 1200$ one. They still would not be a wise consumer decision but at least they won't be a 600$ with an Intel IGP in them marketed for gaming for people that do not know better, that's just a scam.

According to http://www.dell.com/us/p/alienware-steam-machine/pd the Alienware Steam machines do have nVidia graphics and the $529 USD version has comparable-ish stats for less money than my current custom build.
The GPU is a "custom" low end mobile GPU similar to what is used in the surface book it's performance is less than a gtx 950 (some what less than an 860m) there is a reason why they don't specify what GPU they are running.

I don't know what you have at home but you won't be running any major titles at any playable settings on this poc.