A CEO of Dell’s Alienware division fears it will be difficult to sell a Steam Machine for a profit. He states that the model his company plans to release “will definitely be the least profitable system Dell ever sells.”
The statement comes from Frank Azor, general manager of Dell’s Alienware branch. “It’s going to be a big challenge,” he says when asked by The Wall Street Journal about the ability to compete with Sony’s PlayStation 4 and Microsoft’s Xbox One. Consoles are often sold at a loss or at least for little profit because the manufacturers make money from selling software titles.
With Steam OS, however, it is Valve that earns money from the sale of games; the hardware partners do not receive any royalties. However, the price of the cheapest Steam Machines should not be much higher than that of the last generation of consoles, if the platform is to be a success. When the first batch of Steam Machines was announced, the cheapest model was $500 and the most expensive $2584.
Tuan Nguyen, who is responsible for products and marketing at the American computer chain iBuyPower, also has his doubts. As a hardware partner of Valve, iBuyPower is also coming with a Steam Machine, but Nguyen is concerned about the large number of systems on the way. “It’s like the Android phone market. You have devices with all kinds of wild specifications and prices.” According to him, Valve would do better to release a single machine, referring to what Google is doing with Nexus. This would create less confusion and be more attractive to consumers.
The fact that the manufacturers do go into business with Valve would be because of the enormous influence of the Steam platform on PC gaming. Steam now has 75 million active accounts.