I work in IT and am a huge PC gamer and I still think the concept, if pulled off correctly, sounds awesome.
If Valve (or their 'partners') can supply me with:
- a small, powerful, reasonably quiet box that can sit in my living room, and
- allow me to play my Steam catalog of games (I'd even settle for "Steambox certified" games in the future) on my couch with a well built controller, and
- provide the capability to steam videos and other media (their own app store concept for such things would be ok if they didn't allow straight windows apps to run)
I reckon I'd play a lot more of the racing games I've got if I could easily play it from the living room. If they can do all of the above I'd buy one. Yes, I can build a media centre pc and throw it in the living room but I have neither the time or the inclination to stuff around with stuff like that any more. If I can plug this in and it just works, then I'm all for it.
Being able to use the box as a media player is an essential for me, though. I don't see the point of having what is essentially a PC sitting in the living room that can't perform that function. I'd love for it to have a blu-ray player too but there just isn't a lot of chance of that happening with it being a Steam box.

I'm not sure why you're all thinking that Microsoft would be against selling more copies of Windows, though by having this Steambox run Windows. (What else would it run, btw?) Would it eat in to the 360 market? I doubt it - this would appear to appeal more to PC gamers. Even if it does, IT companies like Microsoft often make partnerships that outsiders would consider unlikely. Like partnering with VMware and Citrix when you're in direct competition for your virtualisation platforms, or with Apple for Office for Mac etc. At the end of the day, if there are now 4 major consoles in the market instead of 3 and Microsoft stands to profit from two of them, that's likely a win on the balance sheet for the company.
As for it running other console games (Nintendo, Playstation), I find that extremely unlikely as these have completely different CPU architectures.
Matty wrote:What's stopping it from running console games? Unless MS or Sony have bought the exclusive rights to the game, there is no reason console games can't be released on it.
The fact that, at least with Sony, their PS3 operating system is proprietary and would not be able to be sold or adapted without Sony's express permission, not to mention access to their source code. I imagine the same is try for the custom Windows install on the Xbox 360.
Technically speaking, there's no reason 360 games couldn't be made to run on Steambox as they run on the DirectX platform with x86 architecture and the 360 essentially runs a cut down Win2k3 kernel to begin with (from memory). Whether Microsoft would allow this is another matter but I could potentially see that making financial sense.
In the early days, the 360 was sold at a loss with the money to be made back in Microsoft's cut from games sales. If they aren't having to pay anything for the console manufacture and are actually making a cut from licensing Windows for them, then they could stand to make a lot of money from pure games sales.
Imagine a dual PC / 360 games console - that would be fantastic. I doubt it would happen though - Microsoft have their own roadmap for the future of the Xbox platform - including their next generation box that is in the works. I doubt they would potentially put that in jeopardy for an unexpected offer from Valve to team up.