Steam Machines Delayed: What It Means For Microsoft Corporation's PC Gaming Dominance

One of the biggest developments in the world of gaming during the past year was the announcement of Valve's Steam Machines -- PCs running a new Linux-based operating system called SteamOS. Valve is known for game series such as Half Life and Portal, as well as the Steam PC gaming platform, and Steam Machines will be Valve's attempt to unshackle PC gaming from Microsoft Windows.

Valve's unorthodox controller for the upcoming Steam Machines: Source: Valve

Valve recently announced that its Steam Machines will be delayed, pushing the release back to sometime in 2015. While it's unclear if Valve's hardware partners will also push back their releases, or if SteamOS itself will be delayed, this adds to the list of issues that will make Steam Machines and SteamOS a long shot at best.

The state of PC gaming
Nearly all major PC games use Microsoft's DirectX API, making them exclusive to Windows. There are some games, like Minecraft, that use the cross-platform OpenGL API instead, but PC gaming is overwhelmingly dominated by Windows. Valve's own software survey, conducted monthly, gives Windows a 95% share of all Steam users. MacOS is second with about 3.4% of Steam users, and Linux is a distant third with only 1.1%.

What this means is that game developers have almost no incentive at all to target non-Windows platforms. DirectX became the standard because Windows was the standard, and with less than 5% of the PC gaming market left behind by using DirectX, the return on investment for game companies to go cross-platform is non-existent.

This represents a big problem for Steam Machines. Since SteamOS is based on Linux, only games that are built for Linux will be able to run on the devices. Major games will be absent, and that brings into question the point of Steam Machines in the first place.

Valve's attempt to get around this restriction is in-home streaming. SteamOS -- and indeed any PC that can run the Steam platform -- is capable of streaming games that are running on a different PC on the same network. The typical setup would be a Windows gaming PC running a game, streaming it to a Steam Machine in the living room. While this allows Valve to say that SteamOS can play every game on Steam, it still requires a Windows gaming PC.

New DirectX on the way
The delay to 2015 also creates another problem. Valve claims to have greatly increased the graphics processing performance of Steam OS, not surprising given the recent talk by NVIDIA and AMD about how OpenGL can be optimized to perform better than DirectX 11. But Microsoft plans to release a new version of DirectX, DirectX 12, sometime in 2015, and the company is aiming to greatly reduce the overhead involved with using the API. By the time Steam Machines make it to the market, DirectX 12 could render any improvements that Valve has made moot.

Steam Machines will be in a chicken-and-egg situation when they finally do launch. Convincing major developers to support SteamOS will be difficult, given that 95% of Steam users use Windows. Convincing consumers to buy Steam Machines or install SteamOS will be difficult without many major games. SteamOS will support only a subset of what can be played on Windows, and those that already have a Windows gaming PC will have little reason to buy a Steam Machine.

The bottom line
The delay of Valve's Steam Machines adds to the list of problems facing the platform. With Microsoft's DirectX still the standard graphics API for PC games -- and Windows still the overwhelming choice among PC gamers -- convincing developers to take the time to support SteamOS will be quite a challenge. Valve has no plans to develop exclusive games for SteamOS, and no one else will either, given Windows' market share. Steam Machines don't appear to present a real threat to Microsoft's PC gaming dominance, and the delay only makes the odds longer for SteamOS.

Speaking of dominance, this could be a $14.4 trillion revolution?
Have you ever dreamed of traveling back in time and telling your younger self to invest in Apple? Or to load up on at its IPO, and then just keep holding? We haven't mastered time travel, but there is a way to get out ahead of the next big thing. The secret is to find a small-cap "pure-play" and then watch as the industry -- and your company -- enjoy those same explosive returns. Our team of equity analysts has identified one stock that's ready for stunning profits with the growth of a $14.4 TRILLION industry. You can't travel back in time, but you can set up your future. Click here for the whole story in our eye-opening report.

The article Steam Machines Delayed: What It Means For Microsoft Corporation's PC Gaming Dominance originally appeared on

Timothy Green owns shares of Microsoft. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story