Steam Machine will be Alienware's least profitable PC ever

Specialist hardware makers weigh in on Valve's bid to bring Steam into the console world

When the first Steam Machines hit stores later this year, they will come from a variety of established PC hardware manufacturers, but not from Valve itself. The Wall Street Journal recently spoke with a number of those hardware companies about the Steam Machine plan, and found varying degrees of enthusiasm for the project.

Frank Azor, GM of Dell's Alienware brand, told the paper he plans to offer a Steam Machine, but isn't terribly optimistic about its impact on the bottom line.

"It's going to be very challenging," Azor said. "This will absolutely be the least profitable system we ever sell."

iBuyPower will also be selling its own Steam Machine--dubbed the SBX--but director of products and marketing Tuan Nguyen said he was skeptical about the proliferation of Steam Machines that will be hitting the market.

"It's like the Android phone marketplace," Nguyen said, "You have phones all over the place with wild specs and pricing."

Nguyen said the devices may perform better if Valve entered the market itself, much like Google has a line of Nexus phones and tablets it makes as a hardware investment in its Android software business.

Despite the misgivings, Azor said Alienware was on board with the Steam Machines in the hopes that there's a significant market of PC gamers eager to play the same titles from their couches. Falcon Northwest Computer Systems is similarly hopeful for Valve's entry into the living room, saying, "If anyone can do this, Valve can do it."

Related stories

Native American nation files lawsuit against Valve over skins gambling

“Valve has profited handsomely for years from illegal online gambling, and has made only token efforts to stop it,” says Quinault Nation

By Haydn Taylor

Valve finally tackles review bombing as Borderlands 2 attacked over Epic exclusivity

Last week's work of user scores discounted under Steam's new 'off-topic review activity' system

By James Batchelor

Latest comments (5)

Klaus Preisinger Freelance Writing 4 years ago
The smallest of the Alienware Aurora models (dubbed gaming PCs) will cost 1200. If you buy the same PC without the Alienware branding (don't worry, it will still come pre-assebled and installed), it will cost 827. Not that any other retailer would ever allow you to combine a socket 2011 i7 with an entry level graphics card like that. If you spend 982, you get a PC which easily outperforms the Alienware model.

knowing that, it can hardly come as a surprise that Alienware finds its margins diminished when it comes to Steam Machiens. It's tougher to overcharge players when there is competition.
12Sign inorRegisterto rate and reply
Rick Lopez Illustrator, Graphic Designer 4 years ago
You know, I never really saw the point of these steam machines. It would have been nice if they offered a balance between the PC expirience and the affordability of console systems. But it ended up offering niether. The way i see it, for a bit more its probably worth just getting a regular PC.
4Sign inorRegisterto rate and reply
Eyal Teler Programmer 4 years ago
The way I see it, it's a matter of form factor. If you're fine with the regular PC form factor, build your own PC. If you want something more console-like, a Steam Machine might be a good choice. Personally I'd prefer to have console-like cases instead of a Steam Machine, and use my own components.
0Sign inorRegisterto rate and reply
Show all comments (5)
Adam Campbell Game Manager, Azoomee4 years ago
This doesn't surprise me but I'm not blaming Alienware's pricing or premium product marketing.

Steam Machines are untested waters, whilst Alienware have a solid business selling 'high-end' Windows based gaming machines, they do not with Steam (Linux). So, of course its likely to be the worst selling.

As for what this means for Steam Machines... Again, early days. I can't imagine millions of sales in the launch week of these devices but there's still potential in the future.
0Sign inorRegisterto rate and reply
Jeff Kleist Writer, Marketing, Licensing 4 years ago
Steam Machines are unlikely to be able tongi the economies of scale that their custom designs for a console like form factor will demand for manufacturers to stay with them. Combine that with the non-locked specs, and the whole thing is just going to turn into a sticker on the SAME PC You would have gotten anyway inside three years

Microsoft successfully standardized the industry in a lot of easy with DirectX, and a bunch of similar initiatives, for better or worse. They tried numerous times to create some way of measuring performance for the layman and failed with the metal level of the OS. People who want a console will buy a console, and people who want a PC build or have built a PC. Outsourced hardware has a poor history, anyone remember 3DO? Valve doesn't have the ecosystem to compete in the larger space, the content deals, or the willingness to spend on consumers. Billionaire Gabe Newell can't even staff a phone support line, or a competent/non-worked to death customer service department that has solved for me the simplest tech support problems I. Less than seven days, 3 emails, and ignoring of my first sentence twice "Do not send me a form letter". The record is three weeks, at lest eight emails, and every piece of required material was in the initial email per the FAQ.

Valve claims they only hire "qualified people". Well, the lady at EA Origin didn't sound like a gamer, and solved my similar problem in ten minutes. Joe Sixpack will not stand for this level of customer service, and maybe, according to several ex-Valve employees I know, they'd spend more time making Half-Life, and less time answering calls from desperate customers bashing random extensions trying to get support on the main office number.

Playing in the mainstream is very different from the boutique enthusiast crowd, which in the unlikely event these sell in any numbers, as Valve has no brand recognition among the mainstream, and sales will not justify propping up their buts when inevitably, Alienware and others are burning cash fielding the same.
1Sign inorRegisterto rate and reply

Sign in to contribute

Need an account? Register now.