Dell: Steam Machines won't be very profitable

The head of Dell’s Alienware division admits keeping Steam Machines at console-like price levels will be a challenge.

Steam Machines — the PC-based game consoles that run Valve’s Steam OS — are due out soon, and nearly every PC vendor will have a Steam Machine out on the market. Despite the hype about the devices being driven by Intel and Valve, one Steam Machine manufacturer has publicly come out with muted enthusiasm on the form factor.

“It’s going to be very challenging,” said Frank Azor, general manager of Dell’s Alienware division, to the Wall Street Journal on the topic of the device’s potential profitability. “This will absolutely be the least profitable system we ever sell.”

The reason why the Steam Machine might not be a highly profitable venture for many PC manufacturers is two-fold: first manufacturers feel immense pressure to keep the devices at a price near that of consoles, and Valve isn’t subsidizing the machines through royalties from sales of video games.

But despite the muted enthusiasm directed towards the consoles that Azor gave off in the Wall Street Journal interview, when talking to PC Gamer he backtracked and changed his tone.

“Alienware is very optimistic about PC gaming’s future and its opportunity to extend to the TV. We have been partners with Valve since the inception of the Steam Machine over two years ago,” Azor said. “Our decision to invest in developing the purpose-built Alienware Steam Machine, pairing it with incredible performance and pricing it as aggressively as possible has everything to do with how much we believe in this vision and want to see it materialize.”

While some, like Azor, *may have schizophrenic enthusiasm for the PC console, the Steam Machine does have its out-and-out detractors like PC-maker iBuyPower. Speaking to the Wall Street Journal, Tuan Nguyen, director of products and marketing at the company, called Valve’s Steam Machine strategy confusing.

“It’s like the Android phone marketplace,” he said, “You have phones all over the place with wild specs and pricing.”

Nguyen suggested that instead Valve should have taken an approach similar to what Google has done with the Nexus: contract a manufacturer to build a branded device instead of offering a plethora.

More details on the Steam Machines are expected in the coming months.

Source:*Wall Street Journal*

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