When I saw Steam announce the Steam Box, I did a double-take.
A buddy of mine, when I first brought up the Steam Box as a guided missile aimed at the X-Box and remarked that this was exactly what Microsoft should have done, said the Steam guys did it because they were gamers.
And it got me thinking.
For almost 20 years, Microsoft has been trying to own the gaming platform market as part of a broader goal to own the home. The Xbox came out of the era where folks thought Smart TVs were the future.
Microsoft tried to leverage its position as the dominant player in the desktop PC market to enter the home through the gaming console.
What Microsoft did was create an entirely separate gaming ecosystem centered on a platform they engineered. And they had orphaned all of those PC games as they chased the console crown.
PC games had remained tied to the desktop.
And there they remained.
Microsoft, at its core, is an OS company. And so the solution to winning this new market was to build a new OS with a new API, and have all the games in the world converted to it. And once they were converted to this new API, global domination would occur naturally.
Steam took a very different approach.
As a gaming company, they saw the problem of games differently. Gamers take a game and hack it until it becomes the game they want. They will spend days finding bizarre tweaks to speed up the game. There is a whole community of people creating new and better assets for games. There is an entire community devoted to porting games from dead platforms to modern ones.
In that context, Steam approached the problem differently and asked: “How do I hack a game so it can run on a handheld device?”
They couldn’t ask developers to redo their games. So they leveraged technologies and techniques they had invented for desktop PCs to support the wide variety of input devices PC gamers want to use in their games. They leveraged the large community of folks who figured out how to tweak game customization to make games run on platforms the developers never imagined.
And using those two insights and some excellent hardware design, they did what seemed impossible: they created a usable handheld gaming device for PC games.
But what about Windows? Again, the Steam folks, leveraging their gaming heritage, didn’t let that daunt them. So they used the kinds of cross-platform technologies many gamers use and got it to work.
Does it work flawlessly?
No. But Steam knew its audience well. PC gamers are used to tweaking, fidgeting, and changing things. Why did they know them? Because they loved gamers.
The Steam Deck was the warning shot.
The Steam Box is the guided missile.
I worked at Zynga. And what I learned at Zynga is how much platforms hate games. Just look at how Facebook, Apple, and Microsoft turned what were viable gaming platforms into dust. Facebook and Apple are extorting unsustainable prices. The 30% haircut basically makes games unprofitable unless they are wildly successful, unless you are helping with distribution. And the Apple Store is awful. And Facebook actively suppressed its platform. Microsoft was determined to move gaming off of Windows onto the Xbox. Instead of making Windows better, they made it “acceptable” for gaming while trying to push gaming to the x-box.
The Xbox is a fine gaming platform, but it’s restrictive in the kinds of games you can ship on it, and the costs for game developers to produce a game are high.
And so the world looked like this: there were gaming platforms like PS5 and Xbox that offered an exceptionally curated set of games, while the PC gaming market was left to fester on desktops and laptops, where the broadest and richest set of games lived. And the dominant platform for PC games was doing very little to improve PCs as a gaming platform because their real goal was to get every game to run on the Xbox.
And so while everyone else did what they could to kill gaming on their platform, Steam chugged along. They focused on making something that was great for game companies, and game developers and gamers. It’s 2025, and basically, I play Steam Games. If the game isn’t on Steam, it doesn’t exist.
So Steam looked at the problem and said, “What if I put the Steam games in the living room?”
So they focused on building that. They did it by figuring out how to package the game so it could be played as a console game in a box. And having solved it for the Steam Deck, the Steam Box was a snap. In fact, the software stack can run on a wide variety of hardware platforms.
Why? Because the gamer’s ethos is to do that.
And so, after so many years, Steam has brought PC games to the living room at a very low cost.
Something Microsoft has failed to do, after spending billions on the X-Box.
In many ways, this reminds me of IBM. IBM had spent the last 30+ years in the wilderness of technology, but focused relentlessly on taking care of its customers.
And when the movement to move away from the Cloud happened, they happened to make the most important acquisition of the last 30 years, namely Red Hat. With Red Hat, Big Blue for a lot of companies has become the “trusted advisor” for modern workloads, with OpenShift being positioned as the right way to do modern kubernetes workloads.
Steam spent 20+ years being relentlessly focused on its customer base. Their relentless focus on a customer base others didn’t consider valuable has enabled them to secure a privileged position as a middleman. And in so doing, they have helped them to take advantage of long-term technology trends they can now leverage. It’s a fantastic statement on why you should stay close to your customers and the dangers of pissing them off.
Leave a Reply