The Verge has monolithic piece with Gabe Newell. It details the ex-Windows developer's vision for how a Steam-centered hardware platform will work. Short answer: it'll be the computer brain that commands all your home entertainment, on any screen across the whole house.
Newell sees something like a PC, but one that talks to computer monitors, TVs, controllers and, perhaps, mobile — those plans are still in R&D — to allow you to access the Web, PC games, Android games through Chrome and whatever else developers can make available to you. What you won't see is a traditional home ecosystem that's built around cable TVs and set-top boxes. That means having to rely on services that have embraced the Web for your shows, music, games and more, such as Netflix and Hulu, Spotify and Pandora, Steam and GOG, etc.
Since Valve's future hardware will run Linux and not Windows 8 — most Steam users run Windows — developers will be able to add to Valve's effort in an open-source environment rather than be forced to play by Microsoft or Apple's rules. Newell hopes this has a leveraging effect in such a way that his audience on Steam, which cranks out tons of player-made content for the likes of Team Fortress 2 and Skyrim, can develop alongside the professionals.
Here's how he describes it:
"We'll come out with our own and we'll sell it to consumers by ourselves. That'll be a Linux box, [and] if you want to install Windows you can. We're not going to make it hard. This is not some locked box by any stretch of the imagination. We also think that a controller that has higher precision and lower latency is another interesting thing to have… The Steam Box will also be a server. Any PC can serve multiple monitors, so over time, the next-generation (post-Kepler) you can have one GPU that's serving up eight simulateneous game calls. So you could have one PC and eight televisions and eight controllers and everybody getting great performance out of it."
Newell also says Valve is exploring technology that hasn't been popularized:
"I think you'll see controllers coming from us that use a lot of biometric data… essentially adding more communication bandwidth between the game and the person playing it, especially in ways the player isn't necessarily conscious of. Biometrics gives us more visibility. Also, gaze tracking. we think gaze tracking is gonna turn out to be super important."
The most unusual approach Newell speaks to involves turning Steam, his company's digital distribution platform on PC and Mac (and, in a limited fashion, the PlayStation 3), into something of an online franchise:
"The backend services should be network APIs that anybody can use. On the consumer side, anybody should be able to put up and store that hooks into those services… Some people will create team stores, some people will creates Sony stores, some people will create stores with only games that they think meet their quality bar. Somebody is going to create a store that says 'these are the worst games on Steam.' So that's an example of where our thinking is leading us right now."
Where will this all lead them next? That's anyone's guess. Read all of what Newell had to say here.